You run PR for a firm that has recently become embroiled in a scandal. You've been...

 

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You run PR for a firm that has recently become embroiled in a scandal. You've been trying to keep it under wraps, but the media has caught wind of it. You know that the media has two options: they can "ignore" (in which case both you and the media earn 0) or they can escalate. If they escalate, you can either "acknowledge" the scandal (in which case the media earns 2 and your firm earns -2) or deny. If you deny, the media can either back-off or release the damning documents. If they back-off, you can also back off (in which case both you and the media earn -1 for wasting the public's time) or you can become more steadfast in your denial (in which case the media will release the documents and both of you earn - for the massive scandal that follows). If the media decides to release the documents, no matter what you do, both you and the media earn -∞. a. Create a decision tree to present the various decisions that you and the media make. b. Many firms when embroiled in a scandal, have a policy of releasing a statement addressing the issue before refusing to comment on it even further. Using the decision tree above, explain why this strategy makes sense (NB: This is an example of a "gossip war" or, more generally, "mutually assured destruction"). You run PR for a firm that has recently become embroiled in a scandal. You've been trying to keep it under wraps, but the media has caught wind of it. You know that the media has two options: they can "ignore" (in which case both you and the media earn 0) or they can escalate. If they escalate, you can either "acknowledge" the scandal (in which case the media earns 2 and your firm earns -2) or deny. If you deny, the media can either back-off or release the damning documents. If they back-off, you can also back off (in which case both you and the media earn -1 for wasting the public's time) or you can become more steadfast in your denial (in which case the media will release the documents and both of you earn - for the massive scandal that follows). If the media decides to release the documents, no matter what you do, both you and the media earn -∞. a. Create a decision tree to present the various decisions that you and the media make. b. Many firms when embroiled in a scandal, have a policy of releasing a statement addressing the issue before refusing to comment on it even further. Using the decision tree above, explain why this strategy makes sense (NB: This is an example of a "gossip war" or, more generally, "mutually assured destruction").