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

question 45

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.The number of inefficient outcomes resulting from the bargaining game is:

• A) 3.
• B) 5.
• C) 6.
• D) 8.

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