Intel made large loyalty payments to HP in exchange for HP buying most of their chips from Intel instead of rival AMD. AMD sued Intel under the antitrust laws, and Intel settled the case by paying $1.25 billion to AMD.

• Who made the bad decision?
• What information did they have? And was it good, bad, or unclear?
• What was their incentive?
• What incentive conflict was being controlled by these loyalty payments?
• What advice did Intel ignore when they adopted this practice and speculate why Intelignoredthe advice.