$8.$ Exercise $15\mathrm{.}11$

Consider the following manufacturer$$distributor coordination game.

ManufacturerProduct Update$/$Higher MSRPNo Update$/$Same MSRPDistributorDiscontinue Special Selling Services$$3$ M$,$$$0$ M$$12$ M$,$$$6$ MContinue Special Selling Services$$6$ M$,$$$18$ M$$0$ M$,$$$0$ M

Which of the following sets of strategies are Nash equilibria?$$Check all that apply.

$\{$DiscontinueDDiscontinueD$$with Probability $=0\mathrm{.}75,$ UpdateMUpdateM$$with Probability $=0\mathrm{.}8\}$

$\{$DiscontinueDDiscontinueD$,$ No$$UpdateMNo$$UpdateM$\}$

$\{$ContinueDContinueD$,$ No$$UpdateMNo$$UpdateM$\}$

$\{$ContinueDContinueD$,$ UpdateMUpdateM$\}$

$\{$DiscontinueDDiscontinueD$,$ UpdateMUpdateM$\}$

$\{$DiscontinueDDiscontinueD$$with Probability $=0\mathrm{.}45,$ UpdateMUpdateM$$with Probability $=0\mathrm{.}56\}$

True or False: The manufacturer can secure higher expected profit by entering into a relational contract with the distributor.

True

False