Analyze a negotiation between management and labor

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Reference no: EM1369254

Assume you have a negotiation between Management and Labor concerning Labor wages. 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 equilibrium of this sequential game to be?

(b) If Labor moves first what would you expect the equilibrium of this sequential game to be?

Reference no: EM1369254

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