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Mgmt and a labor union are bargaining over how much of a $150 surplus to give...

Mgmt and a labor union are bargaining over how much of a $150 surplus to give to the union. The $150 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 $150. Which of the following is true?

A. There are multiple Nash equilibrium

B. ($150, $0) is the unique Nash equilibrium.

C. There is a unique subgame perfect equilibrium.

D. Both A and C.

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Answer #1

Solution: There are multiple Nash equilibrium
Explanation: There are multiple Nash equilibrium and ($75, $75) will be a unique nash equilibrium

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