Consider again the sequential technology choice game in Technical Problem 13 in which Sony chooses its cell phone technology before Motorola. Motorola makes the most profit for itself if both firms choose analog technology for their cell phones. Motorola considers the following strategic moves:a. Motorola makes the following threat before Sony makes its decision: ?If you (Sony) choose Digital, then we will choose Analog.? Does this threat accomplish Motorola?s objective of getting both firms to adopt analog technology? Explain.b. Motorola makes the following statement before Sony makes its decision: ?If you (Sony) choose Analog, then we promise to choose Analog.? Is this a strategic promise? Why or why not? Does the statement accomplish Motorola?s objective of getting both firms to adopt analog technology? Explain.

Data From Problem 13

In the technology choice game presented in Figure 13.4, draw the game tree when Sony makes its technology decision first. Find the outcome of the game using the roll-back method. Does Sony experience a first-mover advantage? Explain.

Figure 13.4

Motorola's technology Analog Digital A B Analog $10, $13.75 $8, $9 Sony's technology Digital $9.50, $11 $11.875, $11.25 Payoffs in millions of dollars of profit annually Panel A Simultaneous technology decision Sony, Motorola Digital $11.875, $11.25 Sony 2 Digital Analog $8, $9 Motorola 1 Digital $9.50, $11 Sony 2 Analog Analog > $10, $13.75 Panel B Motorola secures a first-mover advantage