Microeconomic Theory
12th Edition
ISBN: 9781337517942
Author: NICHOLSON
Publisher: Cengage
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Question
Chapter 16, Problem 16.8P
a)
To determine
To find:Nash equilibrium wage contract.
b)
To determine
To know:Whether alternative wage contract is pareto superior to the contract above.
c)
To determine
To know:Condition under which a subpart-perfect equilibrium.
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Consider the following normal form representation of a negotiation between management and labor over wages:
Management
Bargain
Hard
Be Nice
earn 19
Labor
Bargain
Hard
0,0
10, 15
Be Nice
19,8
12, 12
Number of pure strategy Nash equilibria in this simultaneous-move game: 2
V
If Management can credibly move first, they will be able to
In the Management-Labor bargaining game, how much does Labor earn if they can move first? (Management payoffs are bold)
10
15
18
20
In a two good two trader model, there are
1000 units of commodity-1 and 800 units of
commodity-2. Explain what additional
information is required to determine the
contract curve and the competitive equilibrium
(if any). Explain with the help of diagram.
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