For the following question
Consider a simultaneous move game between a union and a company.If both the parties bargain hard,each would gain nothing.If only one party bargains hard the accommodating party gets a profit of $1 million while the bargaining party gets a $5 million,while if they both accommodate,they each get $3 million.
-If the firm threatens a lockout (and the threat is credible),what is the union's best response?
A)Bargain hard
B)Accommodate
C)Run
D)Hide

Question

​For the following question
Consider a simultaneous move game between a union and a company.If both the parties bargain hard,each would gain nothing.If only one party bargains hard the accommodating party gets a profit of $1 million while the bargaining party gets a $5 million,while if they both accommodate,they each get $3 million.
-​If the firm threatens a lockout (and the threat is credible),what is the union's best response?
A)​Bargain hard
B)Accommodate
C)Run
D)​Hide

Quizplus · Accepted Answer

Given the threat of a lockout, the union's best response is to accommodate. This is because a lockout implies the company is bargaining hard. If the union also bargains hard, both parties gain nothing. By accommodating, the union ensures it still gains $1 million, which is better than gaining nothing.

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