Suppose That You Are a Manager

question 24

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 true?

• A) There are multiple Nash equilibria.
• B) ($25, $25) is a Nash equilibrium.
• C) A Nash equilibrium is also a perfect equilibrium.
• D) There are multiple Nash equilibria, and ($25, $25) is a Nash equilibrium.

---

Definitions:

Gustatory Cortex

Brain region involved in the perception of taste.

Medulla Oblongata

A part of the brainstem crucial for controlling autonomic functions such as breathing, heart rate, and blood pressure.

Ethmoid Bone

A spongy, cubical bone at the root of the nose that separates the nasal cavity from the brain, part of the cranium.

Olfactory Bulbs

Structures located at the base of the brain's frontal lobes, involved in the processing of odors.