Consider the wage negotiations between Cricket Australia (CA) and the union that represents the players. Assume that Cricket Australia and the union are bargaining over how much of a $200 surplus will be split. Suppose that the union moves first and suggests an offer p. CA may accept or reject the offer. If the offer is accepted the union gets p and the CA gets 200 - p. If the offer is rejected, CA will now make an offer q for which the union may accept or reject. If the offer q is accepted the Union gets q and CA gets 200 - q. If offer q is rejected, both parties get 0. Assume that the possible offers to be made are $1, $100 or $199. What is payoff for the Union in the subgame perfect equilibrium of this bargaining scenario?

Consider the wage negotiations between Cricket Australia (CA) and the union that represents the players. Assume that Cricket Australia and the union are bargaining over how much of a $200 surplus will be split. Suppose that the union moves first and suggests an offer p. CA may accept or reject the offer. If the offer is accepted the union gets p and the CA gets 200 - p. If the offer is rejected, CA will now make an offer q for which the union may accept or reject. If the offer q is accepted the Union gets q and CA gets 200 - q. If offer q is rejected, both parties get 0. Assume that the possible offers to be made are $1, $100 or $199. What is payoff for the Union in the subgame perfect equilibrium of this bargaining scenario?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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