# Question

The labor union and management of a particular company have been negotiating a new labor contract. However, negotiations have now come to an impasse, with management making a “final” offer of a wage increase of $1.10 per hour and the union making a “final” demand of a $1.60 per hour increase. Therefore, both sides have agreed to let an impartial arbitrator set the wage increase somewhere between $1.10 and $1.60 per hour (inclusively).

The arbitrator has asked each side to submit to her a confidential proposal for a fair and economically reasonable wage increase (rounded to the nearest dime). From past experience, both sides know that this arbitrator normally accepts the proposal of the side that gives the most from its final figure. If neither side changes its final figure, or if they both give in the same amount, then the arbitrator normally compromises halfway between ($1.35 in this case). Each side now needs to determine what wage increase to propose for its own maximum advantage.

Formulate this problem as a two-person, zero-sum game.

The arbitrator has asked each side to submit to her a confidential proposal for a fair and economically reasonable wage increase (rounded to the nearest dime). From past experience, both sides know that this arbitrator normally accepts the proposal of the side that gives the most from its final figure. If neither side changes its final figure, or if they both give in the same amount, then the arbitrator normally compromises halfway between ($1.35 in this case). Each side now needs to determine what wage increase to propose for its own maximum advantage.

Formulate this problem as a two-person, zero-sum game.

## Answer to relevant Questions

For the game having the following payoff table, determine the optimal strategy for each player by successively eliminating dominated strategies. (Indicate the order in which you eliminated strategies.) Reconsider Prob. 15.3-2. Use the graphical procedure described in Sec. 15.4 to determine the optimal mixed strategy for each player according to the minimax criterion. Also give the corresponding value of the game. Consider the game having the following payoff table: (a) Use the approach described in Sec. 15.5 to formulate the problem of finding optimal mixed strategies according to the minimax criterion as a linear programming ...Consider the following parlor game to be played between two players. Each player begins with three chips: one red, one white, and one blue. Each chip can be used only once. To begin, each player selects one of her chips and ...Management of the Telemore Company is considering developing and marketing a new product. It is estimated to be twice as likely that the product would prove to be successful as unsuccessful. It it were successful, the ...Post your question

0