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.
-By threatening to lockout the workers,the firm has
A)Eliminated half of the strategies
B)Forced the union to choose the best response in the firm's best interest
C)Made it in the union's best interest to not strike
D)All of the above

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.
-​By threatening to lockout the workers,the firm has
A)​Eliminated half of the strategies
B)Forced the union to choose the best response in the firm's best interest
C)Made it in the union's best interest to not strike
D)​All of the above

Quizplus · Accepted Answer

By threatening to lockout the workers, the firm has eliminated the strategy of the union to strike, which is half of the strategies. This forces the union to choose the best response in the firm's best interest, which is to accommodate. Moreover, it also makes it in the union's best interest to not strike because if they do, they will gain nothing, while if they accommodate, they will get $3 million. Therefore, all of the above options are correct.

​For the Following Question

For the Following Question