Exam 12: Bargaining

-Consider the one-time Nash bargaining game depicted in Figure 12.2 in which Gog and Magog are bargaining over the distribution of $100. Bids must be in increments of $50. In this game, the sum of the players' bids cannot exceed $100. If the sum of the bids are less than $100, each bidder receives his bid, and the rest is forfeited to the Exchequer. If the sum of the bids exceeds $100, the bidders receive nothing, and $100 is forfeited to the Exchequer. How many possible Nash equilibria are there for this game?

A buyer's reservation price in bargaining is:

Andrew wants to purchase Adam's car. Andrew is prepared to pay a maximum of $2,000. Adam is not willing to accept anything lower than $1,000. Suppose that any failure to reach an agreement reduces Andrew's and Adam's gain from reaching an agreement by 10 percent. If there is no limit to the number of negotiating rounds, what percentage of the bargaining surplus should Adam receive?

Suppose that management and labor are bargaining over the distribution of excess profits amounting to $200 per worker. Suppose that failure to reach an agreement an agreement reduces management's share of the surplus by 5 percent per round and reduces labor's share of the surplus by 7 percent per round. If there is an unlimited number of negotiating rounds, how much of the excess profits will go to the shareholders?

Molly is interested buying Polly's antique doll house. Molly is prepared to spend up to $2,500. Polly will not sell the doll house for less than $2,000. Molly and Polly are prepared to bargain over the doll house until "hell freezes over." Suppose Molly makes the first offer, there is an odd number bargaining rounds.

A seller's reservation price in bargaining is:

Molly is interested buying Polly's antique doll house. Molly is prepared to spend up to$2,500. Polly will not sell the doll house for less than $2,000. Polly has discovered,however, that Molly has $2,500 to spend. Molly and Polly are prepared to bargain over the doll house until "hell freezes over." If Molly makes the first offer and there are an even number of offers and counteroffers, Polly will end up selling the doll house for:

It is March and Ozzie wants to purchase Harriet's season tickets to Boston Red Sox games. Ozzie is a member of "Red Sox Nation" and can hardly wait to get his hands on Harriet's season tickets. Ozzie is willing to pay up to $4,000. Failure to come to an agreement will reduce Ozzie's gain by 80 percent. Although Harriet likes baseball, she would rather go to the movies. The season tickets were a gift from here good-for-nothing son-in-law. Be that as it may, the minimum amount that Harriet will accept for the tickets is $3,000. Failure to come to an agreement will reduce Harriet's gain by 5 percent. If there is no limit on the number of bargaining rounds, what percentage of the bargaining surplus should Harriet receive?

Suppose that management and labor are bargaining over the distribution of excess profits amounting to $200 per worker. Suppose that failure to reach an agreement an agreement reduces management's share of the surplus by 5 percent per round and reduces labor's share of the surplus by 7 percent per round. If there is an unlimited number of negotiating rounds, how much of the excess profits will go to labor?

Andrew wants to purchase Adam's car. Andrew is prepared to pay a maximum of $2,000. Adam is not willing to accept anything lower than $1,000. Suppose Andrew makes the first offer and there is an odd number offers and counteroffers. If Andrew and Adam are equally patient, Adam will sell his car for:

-Symmetric impatience refers to:

Molly is interested buying Polly's antique doll house. Molly is prepared to spend up to $2,500. Polly will not sell the doll house for less than $2,000. Polly has discovered, however, that Molly has $2,500 to spend. Suppose that any failure to reach an agreement reduces Molly's and Polly's gain by 20 percent. If there is no limit to the number of bargaining rounds, how much should Molly offer for the antique doll house? :

Andrew wants to purchase Adam's car. Andrew is prepared to pay a maximum of $2,000. Adam is not willing to accept anything lower than $1,000. Suppose that any failure to reach an agreement reduces Andrew's and Adam's gain from reaching an agreement by 10 percent and 5 percent, respectively. If there is no limit to the number of negotiating rounds, what price should Andrew offer Adam in the first round?

-Consider the one-time Nash bargaining game depicted in Figure 12.1 in which A and B individuals are bargaining over the distribution of $40. Bids must be in increments of $10. In this game, the sum of the players' bids cannot exceed $40. If the sum of the bids are less than $40, each bidder receives his or her bid, and the rest goes to charity. If the sum of the bids exceeds $40, the bidders receive nothing, and $40 is given to charity. The most likely explanation for the outcome of this bargaining game is: