Texas A&M International University ECO 3320 CHAPTER 16 1)In the strategic view of bargaining: Bargaining is described by an explicit game Insights are drawn from how many similar games are played without specifying the strategies We use the fact that bargaining often results in a fifty-fifty split It is important to limit your opponent's disagreement value In the strategic view of bargaining: You want to improve your opponent's outside options You want to decrease your outside options Bargaining is of a prisoner's dilemma game Bargaining is of a game of 'chicken' In the labor negotiation game: Neither party prefers bargaining hard Neither party prefers accommodating the other Both parties bargain hard in the Nash equilibrium Neither party knows what the equilibrium will be

Texas A&M International University

ECO 3320

CHAPTER 16

1)In the strategic view of bargaining:

1. 1. Bargaining is described by an explicit game
   2. Insights are drawn from how many similar games are played without specifying the strategies
   3. We use the fact that bargaining often results in a fifty-fifty split
   4. It is important to limit your opponent's disagreement value
2. In the strategic view of bargaining:
   1. You want to improve your opponent's outside options
   2. You want to decrease your outside options
   3. Bargaining is of a prisoner's dilemma game
   4. Bargaining is of a game of 'chicken'
3. In the labor negotiation game:
   1. Neither party prefers bargaining hard
   2. Neither party prefers accommodating the other
   3. Both parties bargain hard in the Nash equilibrium
   4. Neither party knows what the equilibrium will be.
4. In the labor negotiation game:
   1. The payoffs are always higher if you accommodate
   2. The payoffs are always higher if your opponent accommodates

4. 3. The payoffs from accommodating are only higher if your opponent bargains hard
   4. The payoffs from accommodating are only higher if your opponent accommodates
5. In the labor negotiation game:
   1. The payoffs from bargaining hard are only higher if your opponent accommodates
   2. The payoffs from bargaining hard are only higher if your opponent bargains hard
   3. The payoffs are always higher if you bargain hard
   4. The payoffs are always higher if your opponent bargains hard
6. When buying a car from a commission salesman you improve your bargaining position by
   1. shopping for last year's model when the new model year cars are arriving
   2. shopping when the showroom is full of customers
   3. shopping when the car lot has few cars left unsold
   4. shopping toward the beginning of the month
7. In the sequential labor negotiation game:
   1. The first mover has an advantage
   2. The second mover has an advantage
   3. There is no advantage to either mover
   4. none of the above
8. In the sequential labor negotiation game:
   1. The ability to commit to a strategy gives you an advantage
   2. The ability to commit to a strategy gives your opponent an advantage
   3. The ability to commit to a strategy is irrelevant
   4. Players should simply state their desire to commit to a strategy to obtain an advantage
9. The reason we study the sequential labor negotiation game:
   1. Is to show that these games usually go on for rounds and rounds
   2. Is to show the importance of the first mover being able to commit to an offer
   3. Is to show the importance of the second mover being able to commit to an offer
   4. Is to show the problems of prisoners dilemmas
10. In the sequential negotiation games:
    1. You can induce a change in the strategy in your opponent only if your threat is believed
    2. Any threat can induce a change in strategy in your opponent
    3. A threat that is believed is one that you will not have to carry out
    4. A and C
11. Unless you accept his 'final offer' your negotiation opponent threatens to scrap the whole deal:
    1. His threat is more believable if both parties would be harmed by scrapping the deal
    2. His threat is more believable if he has invested resources that lower his return to other options
    3. His threat is more believable if he puts his threat 'in writing'
    4. His threat is more believable if he has balked at this course of action in the past

12. In the nonstrategic view of bargaining
    1. Insights are drawn from how many similar games are played without specifying the strategies
    2. We use the fact that bargaining often results in a fifty-fifty split
    3. The bargain is affected by the parties’ disagreement values
    4. All of the above
13. In the nonstrategic view of bargaining
    1. The first-mover usually gains more
    2. The second-mover usually gains more
    3. The gains are usually split evenly
    4. We can say little about how the gains are shared
14. The disagreement value in a nonstrategic game is most closely related to
    1. opportunity costs
    2. fixed costs
    3. total profit
    4. accounting costs
15. To improve your own bargaining position
    1. have low valued outside options
    2. increase the value of outside options
    3. do not alter the value of your outside options
    4. increase the value of your opponent's outside options
16. Which of the following will improve your salary bargaining position
    1. Wait until the large project you were integral to is completed
    2. Wait until your employer has hired many others with similar skills as yours'
    3. Wait until your employer has invested greatly into the long-term project you lead
    4. At the very outset of a project that you will lead
17. Which of the following will improve your salary bargaining position
    1. The product your team produces has become more costly to produce
    2. New firms have entered with competing products for the one your team produces

C) Your competitors have developed new products that contain more of the features that your team pro

d)        There are fewer close substitutes for the product your team supports

18. Which of the following will improve your supplier contracting bargaining position
    1. Your supplier merges with an alternative supplier
    2. You redesign your component requirements to be more flexible across different potential suppliers
    3. You redesign your component requirements so that your preferred supplier is more integral to produc
    4. Your supplier's chief competitor has exited the market
19. Which of the following will improve your supplier contracting bargaining position
    1. You have a policy of always excluding at least one potential competing supplier
    2. You have a policy of increasing product options by never excluding a potential supplier