Chapter 16

Question 1

strategic views

Answer 1

characterizes bargaining as a formal game of chicken where the ability to commit to a position gives one player bargaining power over its rivals

Question 2

other bargaining view

Answer 2

alternatives to agreement that determine the terms of agreement, regardless of the precise form of the negotiation

Question 3

strategic view of bargaining

Answer 3

two possible strategies - bargaining hard or accomodate

suggests that if you can commit to a position, you can capture a bigger share of the gains of the agreement

Question 4

bargaining hard

Answer 4

each will earn nothing

Question 5

accomodate

Answer 5

split the gains from trade

Question 6

if one bargains hard and the other accomodates

Answer 6

then the one who bargained hard takes 75% gains from agreement

Question 7

credible commitments

Answer 7

are difficult to make because it requires players to commit to a course of action against their self interest

Question 8

labor union game

Answer 8

first mover advantage game

Question 9

first mover advantage

Answer 9

by moving first, equivalently, by committing a bargain hard, the union can capture most gains of trade

Question 10

simultaneous move game

Answer 10

symmetric, therefore management can commit to lock out the union if they receive a low offer.

This completely changes the outcome of the game. and will push the union to accept a generous offer.

Question 11

committing to a lock out

Answer 11

sounds simple but sometimes difficult to persuade and have the union pursue an otherwise unprofitable offer

Question 12

the best threat is

Answer 12

the one you never have to use

Question 13

the outcome of strategic game of bargaining lies in who moves _______ and who can ________ to a position

Answer 13

first

commit

Question 14

axiomatic

Answer 14

nonstrategic view of bargaining

Question 15

non straitening rules of bargaining

Answer 15

does not depend on the rules of the bargaining game or whether players can commit to a position

Question 16

to improve your own bargaining position

Answer 16

improve your outside option or decrease that of your opponent

Question 17

nonstrategic view of bargaining

Answer 17

if you can decrease your own gain to reaching agreement by improving your outside option, you become a tougher bargainer because you have less to gain by reaching agreement.

ex: the best time to ask for a raise is when you have an attractive offer from another company D1 is big.

Question 18

disagreement value - think of

Answer 18

opportunity cost.

ex: if you get a job offer from another company, the cost of staying at your job is the offer you give up to stay.

Question 19

strike threats are more common during ______________, when it would hurt the firm more than it would hurt the union.

Answer 19

seasonal peaks in demand