Consider a negotiation between a car buyer and a used-car salesperson. The car salesperson values a car at $10,000 and the buyer values it at $12,000. Suppose the buyer moves first and offers a price p. The car dealer can accept or reject the offer. If the offer is rejected the buyer can buy an identical car from a different dealer for a price of $7000. In the subgame perfect equilibrium, the buyer receives a net benefit of

Doc and Brewster are in a negotiation over royalties. The negotiations proceed as follows. Doc can set a price p. Having seen Doc’s offer Brewster can either accept (A) or reject (R). If Brewster accepts Doc’s offer the payoffs are p to Doc and 500 – p to Brewster. If Brewster rejects (R) the payoffs are 0 to Doc and 150 to Brewster. What is the highest price p that Doc can offer that is accepted in the subgame perfect equilibrium? p =                       .

Doc and Brewster are in a negotiation over royalties. The negotiations proceed as follows. Doc can set a price p. Having seen Doc’s offer Brewster can either accept (A) or reject (R). If Brewster accepts Doc’s offer the payoffs are p to Doc and 50 – p to Brewster. If Brewster rejects (R) the payoffs are 20 to Doc and 40 to Brewster. With respect to the subgame perfect equilibrium, which statements are true?Group of answer choicesDoc offers a price of p = 10Brewster rejects the offer he gets in equilibriumBrewster accepts the offer he gets in equilibriumBrewster accepts any offer of p ≥ 40.Doc offers any price greater than or equal to 20Doc offer a price less than or equal 40

William owns a car that he values at $5000. Jackson values the car at $7500. The negotiations between them for a potential trade are as follows: William offers a price to Jackson. If Jackson accepts, trade takes place at that price. If Jackson rejects, William keeps the car and Jackson buys a similar car which he values the same as William’s car from James for the price of $6000. What will the outcome be of the negotiation process? Group of answer choices William suggests Jackson pay $6125 and Jackson accepts the deal. William suggests Jackson pay $5000 and Jackson accepts the deal. William suggests Jackson pay $7500 and Jackson accepts the deal. William suggests Jackson pay $6000 and Jackson accepts the deal. William suggests Jackson pay $5000 and Jackson rejects the deal.

Consider the CBA negotiating with Myer regarding the rate of interest for a loan. The CBA can offer any interest rate r between 0 and 10. If Myer accepts the payoff to the CBA is r, and the payoff to Myer is 10 – r. If Myer rejects the offer the payoffs are 0 to the CBA and 4 to Myer.What do we observe in the credible (subgame perfect) equilibrium of this negotiation?Group of answer choicesThe CBA offers r = 10 and Myer rejectsThe CBA offers r = 0 and Myer acceptsThe CBA offers r = 4 and Myer acceptsThe CBA offers r = 10 and Myer acceptsThe CBA offers r = 6 and Myer accepts

Bargaining, and auctions