A Self-Enforcing Agreement

question 12

Multiple Choice

A self-enforcing agreement:

• A) describes an agreement in which every party involved has an incentive to abide by it, assuming that others do the same.
• B) requires a contract.
• C) describes the strategy that makes up a Nash equilibrium.
• D) describes the strategy that makes up a Nash equilibrium and describes an agreement in which every party involved has an incentive to abide by it, assuming that others do the same.

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Definitions:

Resistance Point

The least favorable outcome a negotiator is willing to accept before opting out of the negotiation.

Alternatives

Other possible options or courses of action that can be taken when the first choice is undesirable or not possible.

Negotiations

A series of discussions and exchanges between parties with differing objectives, aimed at reaching a consensus or settlement that is acceptable to all involved.

Concessions

Compromises or allowances made by one party in negotiations, often in order to reach an agreement.