Refer to the normal-form game of bargaining shown below. $\begin{array}{l}
\quad\quad\quad\quad\quad\quad\text { Management }\
\text { Union }
\begin{array}{|l|l|l|l|}
\hline & \$ 0 & \$ 250 & \$ 500 \
\hline \$ 0 & (\$ 0, \$ 0) & (\$ 0, \$ 250) & (\$ 0, \$ 500) \
\hline \$ 250 & (\$ 250, \$ 0) & (\$ 250, \$ 250) & (-\$ 10,-\$ 10) \
\hline \$ 500 & (\$ 500, \$ 0) & (-\$ 10,-\$ 10) & (-\$ 10,-\$ 10)\
\hline
\end{array}\end{array}$ Suppose that management and the union are bargaining over how much of a $500 surplus to give to the union.It is assumed that the surplus can only be split into $250 increments.Furthermore,negotiations are set up such that management and the union must simultaneously and independently write down the amount of surplus to allocate to the union.The payoff structure to this one-shot bargaining game is listed in Figure 10-16.Find the Nash equilibrium(ia)to this game.
A) Union write down $0 and management write down $500.
B) Union write down $250 and management write down $250.
C) Union write down $500 and management write down $0.
D) All of the statements associated with this question constitute Nash equilibria.

Question

Refer to the normal-form game of bargaining shown below. $\begin{array}{l}
\quad\quad\quad\quad\quad\quad\text { Management }\
\text { Union }
\begin{array}{|l|l|l|l|} 
\hline & \$ 0 & \$ 250 & \$ 500 \
\hline \$ 0 & (\$ 0, \$ 0) & (\$ 0, \$ 250) & (\$ 0, \$ 500) \
\hline \$ 250 & (\$ 250, \$ 0) & (\$ 250, \$ 250) & (-\$ 10,-\$ 10) \
\hline \$ 500 & (\$ 500, \$ 0) & (-\$ 10,-\$ 10) & (-\$ 10,-\$ 10)\
\hline
\end{array}\end{array}$ Suppose that management and the union are bargaining over how much of a $500 surplus to give to the union.It is assumed that the surplus can only be split into $250 increments.Furthermore,negotiations are set up such that management and the union must simultaneously and independently write down the amount of surplus to allocate to the union.The payoff structure to this one-shot bargaining game is listed in Figure 10-16.Find the Nash equilibrium(ia)to this game.
A) Union write down $0 and management write down $500.
B) Union write down $250 and management write down $250.
C) Union write down $500 and management write down $0.
D) All of the statements associated with this question constitute Nash equilibria.

Quizplus · Accepted Answer

The Nash equilibrium is when neither player can improve their payoff by changing their strategy, given the strategy of the other player. In this game, the only Nash equilibrium is for both players to write down $250. If either player writes down a different amount, the other player can improve their payoff by writing down $250.

Refer to the Normal-Form Game of Bargaining Shown Below Suppose That Management and the Union Are Bargaining Over How