Author Question: In making promises that are not guaranteed by third parties and in imposing penalties that are not ... (Read 81 times)

mspears3 · **on:** Jul 1, 2018

In making promises that are not guaranteed by third parties and in imposing penalties that are not enforced by third parties, all of the following are credibility-enhancing mechanisms except
a. establishing a bond forfeited by violating the commitment
b. investing in a non-redeployable reputational asset tied to the promise or threat
c. interrupting the communication of negotiated compromises
d. offering a warranty
e. delivering a hostage (e.g., a patent license triggered by violating the promise)

Question 2

The implication of the prisoners' dilemma for a long-run strategy is for firms to
a. Do nothing
b. Differentiate your product that competitors cannot imitate
c. Figure a way to lower their costs
d. Both b and c