LABOR Bargain Hard Be Nice MANAGEMENT Bargain Hard 15,0 20, 10 Be Nice 10,20 30,
ID: 1195474 • Letter: L
Question
LABOR
Bargain Hard
Be Nice
MANAGEMENT
Bargain Hard
15,0
20, 10
Be Nice
10,20
30, 15
1) Pete and Lisa are entering into a bargaining situation in which Pete stands to gain up to $5,000 and Lisa stands to gain up to $1,000, provided they reach an agreement. Who is likely to be the better bargainer?
a) Pete
b) Lisa
c) They will beequally effective
d) These potential gains will have no impact on bargaining
2) Consider a vendor-buyer relationship. Which of the following conditions would lead to the buyer having more bargaining power?
a) Lots of substitutes for the vendor's product are available
b) There are relatively few buyers and many vendors
c) It costs little for buyers to switch vendors
d) All of the above
LABOR
Bargain Hard
Be Nice
MANAGEMENT
Bargain Hard
15,0
20, 10
Be Nice
10,20
30, 15
Explanation / Answer
in the labour management game nash eq is (bargain hard, be nice)
1) d) these potential gains will have no impact on bargaining because nash is a situation where both the players do not change the strategy, thus it will depend on the payoff matrix at different combinations of situations.
2) d) all. As if the product has substitutes you can always pick a cheaper substitute, with fewer buyer influence on price is stronger as voice is stronger, and low cost switching between vendors improves the chances of always choosing a low cost vendor.
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