Refer to the Normal-Form Game of Bargaining Shown Below Suppose That Management and the Union Are Bargaining Over How

question 117

Multiple Choice

Refer to the normal-form game of bargaining shown below. $\begin{array}{l}\quad\quad\quad\quad\quad\quad\text { Management }\\\text { Union }\begin{array}{|l|l|l|l|} \hline & \$ 0 & \$ 250 & \$ 500 \\\hline \$ 0 & (\$ 0, \$ 0) & (\$ 0, \$ 250) & (\$ 0, \$ 500) \\\hline \$ 250 & (\$ 250, \$ 0) & (\$ 250, \$ 250) & (-\$ 10,-\$ 10) \\\hline \$ 500 & (\$ 500, \$ 0) & (-\$ 10,-\$ 10) & (-\$ 10,-\$ 10) \\\hline\end{array}\end{array}$ Suppose that management and the union are bargaining over how much of a $500 surplus to give to the union.It is assumed that the surplus can only be split into $250 increments.Furthermore,negotiations are set up such that management and the union must simultaneously and independently write down the amount of surplus to allocate to the union.The payoff structure to this one-shot bargaining game is listed in Figure 10-16.Find the Nash equilibrium(ia) to this game.

• A) Union write down $0 and management write down $500.
• B) Union write down $250 and management write down $250.
• C) Union write down $500 and management write down $0.
• D) All of the statements associated with this question constitute Nash equilibria.

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Definitions:

Collection Policy

The set of guidelines a company uses to monitor and manage the collection of accounts receivable or owed debts.

Receivables Policy

A set of guidelines a company follows to manage its accounts receivable, including credit terms, collection methods, and credit limits.

Credit-Granting Policy

A set of guidelines that a lender uses to determine whether to extend credit to borrowers and on what terms.

Credit Policy Effects

The impact of a company's credit policy on its cash flows, sales volume, and overall financial health, including aspects like credit terms and collection practices.