Suppose you have a negotiation situation between management and labor do well wh

Question

Suppose you have a negotiation situation between management and labor do well when they each do the opposite of what the other does I.e the best situations for both are : (I) for management to bargain hard( offer low wages) and labor to accommodate ( accepts the contract offered) and (ii) for management to accommodate (offer generous wages ) and labor to bargain hard ( threatens to strike).

(A) If management moves first what would you expect the equilibrium of this sequential game to be.

(B) if labor moves first what would you expect the equilibrium of this sequential game to be.

(C) is this a game with a first mover or last mover advantage? Explain briefly.

Explanation / Answer

A)

if management moves first then there is requiremnt for management to rcruit labour ,so labor having a choice for bargain..means second situation

B)

if labor moves first then labor have no other choice to join cmpny ,so first situation arise where managent can bargain

C)

yes , last mover has advantage because he can bargain more with his choice

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