Suppose That You Are a Manager

question 35

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. 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.

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Definitions:

First Quarter

This term refers to the first three months of a financial year; specifically, January, February, and March, used in fiscal and calendar year reporting.

Service Provider

A company or organization that offers services to others, such as telecommunications, utilities, or healthcare.

Finished Goods Ledger

The subsidiary ledger that contains the individual accounts for each kind of commodity or product produced.

Deferred Revenue

Money received by a company for goods or services yet to be delivered or performed; classified as a liability on the balance sheet until the transaction is completed.