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.If you were the labor union,which type of "rules of play" would you prefer to divide the $50 surplus?
A) One-shot, simultaneous-move game
B) One-shot, sequential-move game with management as the first mover
C) One-shot, sequential-move game with labor union as the first mover
D) One-shot, simultaneous-move game and one-shot, sequential-move game with management as the first mover

Question

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.If you were the labor union,which type of "rules of play" would you prefer to divide the $50 surplus?
A) One-shot, simultaneous-move game
B) One-shot, sequential-move game with management as the first mover
C) One-shot, sequential-move game with labor union as the first mover
D) One-shot, simultaneous-move game and one-shot, sequential-move game with management as the first mover

Quizplus · Accepted Answer

In a sequential-move game, the player who moves first has an advantage because they can strategically make a move that will be to their benefit. In this case, if management moves first, they may offer a small amount of the surplus to the labor union, hoping that the union will accept the offer rather than risk getting nothing if they ask for too much. Therefore, the labor union would prefer to be the first mover because they can make the first offer and set the tone for the negotiation. This gives them an advantage in bargaining for a larger share of the surplus. Thus, option C is the most preferable for the labor union.

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