Bemma plc (B) wishes to sell some land to Ayunfei plc (A). Both A and B each have four possible negotiating strategies available to them. The price which A will pay for the land (£’M) is dependent upon the strategies employed by both A and B as follows: If A adopts A1 then the price B will receive for the land (£M) will be 10, 20, 30 and 40 if B adopts B1, B2, B3 and B4, respectively. If A adopts A2 then the price B will receive for the land (£M) will be 5, 40, 10 and 5 if B adopts B1, B2, B3 and B4, respectively. If A adopts A3 then the price B will receive for the land (£M) will be 40, 20, 30 and 40 if B adopts B1, B2, B3 and B4. If A adopts A4 then the price B will receive for the land (£M) will be 10, 50, 60 and 40 if B adopts B1, B2, B3 and B4, respectively. 

Draw the gain matrix for this problem and discuss to what extent these negotiations can be adequately represented as a zero-sum game. 

Explain why A would never adopt A3 and A4 and why B would not adopt B1. 

Identify the optimal strategy which B should adopt in these negotiations and calculate how much B can expect to obtain for the land. 

Explain why this problem might be better represented as a none zero-sum game and discuss some of the issues which need to be confronted in order to achieve an optimal solution in such negotiations if the problem has the characteristics of a Prisoner’s Dilemma.

Answer rating: 100% (QA)

The gain matrix for this problem is as follows A 1 10 20 30 40 A 2 5 40 10 5 A 3 40 20 30 40 A 4 10 50 60 40 From this gain matrix it is evident that ... View the full answer