Suppose That You Are a Manager Management and a Labor Union Are Bargaining Over How Much

question 105

Multiple Choice

Suppose that you are a manager.You are considering whether or not to monitor employees with the payoffs in the normal-form game shown below. $\begin{array}{c}\text { Worker }\\\text { Manager}\begin{array}{|l|l|l|} \hline & \text { Work } & \text { Shirk } \\\hline & & \\\text { Monitor } & -1,1 & 1,-1 \\\hline \text { Don't } \\\text { Monitor }& 1,-1 & -1,1\\\hline\end{array}\end{array}$ Management and a labor union are bargaining over how much of a $50 surplus to give to the union.The $50 is divisible up to one cent.The players have one shot to reach an agreement.Management has the ability to announce what it wants first,and then the labor union can accept or reject the offer.Both players get zero if the total amounts asked for exceed $50.Which of the following is NOT a Nash equilibrium?

• A) Management requests $50 and the labor union accepts $0.
• B) Management requests $30 and the labor union accepts $10.
• C) Management requests $25 and the labor union accepts $25.
• D) Neither management requesting $50 and the labor union accepting $0 nor management requesting $30 and the labor union accepting $10 are Nash equilibria.

---

Definitions:

Baking Department

The baking department refers to a specialized division within a company or facility focused on the production of baked goods, employing specific techniques and processes.

Floor Space

The total area available or used for a specific purpose within a building, often measured in square feet or meters.

Service Department

A division within a company that provides support services to other departments or divisions, rather than producing goods or services for external customers.

Investment Center Managers

Executives responsible for a business unit or division's operations and financial results, including revenue, expenses, and invested capital.