Consider a simultaneous move game between a plumbers’ union and a school. Each agent can bargain...

Consider a simultaneous move game between a plumbers’ union and a school. Each agent can bargain hard (H) or accommodate (A). If both the parties bargain hard (H,H), each would gain nothing. If only one party bargains hard the accommodating party gets a benefit of $11 million while the bargaining party gets a $55 million, while if they both accommodate (A,A), they each get $33 million in benefit.

a. Draw the bargaining game in normal form (a matrix).

b. Does either player have a strictly dominated strategy?

b. Find each party’s best response and the Nash equilibrium in pure strategies.

c. Is this Nash equilibrium Pareto efficient? Why or why not?

d. Describe a scenario in which the union might threaten an action that might ensure they get the outcome they would prefer.

Expert Solution

Rahul Sunny answered 2 years ago

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