Suppose that Yara wants to purchase a boat from Rana. Yara is willing to pay up to $18,000, while Rana is not willing to accept any offer below $15,000. Assume that there are a finite number of negotiating rounds. If the discount factors for Rana and Yara are discount factor for Rana= 0.05 and discount factor for Yara= 0.05, respectively, how much should Yara offer for the boat? Suppose that Rana's discount factor is discount factor for Rana = 0.20, and Yara’s discount factor =0.15. How much should Yara offer for the boat? How does this offer differ from your r to part a, and why?
Suppose that Yara wants to purchase a boat from Rana. Yara is willing to pay up to $18,000, while Rana is not willing to accept any offer below $15,000. Assume that there are a finite number of negotiating rounds. If the discount factors for Rana and Yara are discount factor for Rana= 0.05 and discount factor for Yara= 0.05, respectively, how much should Yara offer for the boat? Suppose that Rana's discount factor is discount factor for Rana = 0.20, and Yara’s discount factor =0.15. How much should Yara offer for the boat? How does this offer differ from your r to part a, and why?
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter16: Bargaining
Section: Chapter Questions
Problem 6MC
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Suppose that Yara wants to purchase a boat from Rana. Yara is willing to pay up to $18,000, while Rana is not willing to accept any offer below $15,000. Assume that there are a finite number of negotiating rounds.
If the discount factors for Rana and Yara are discount factor for Rana= 0.05 and discount factor for Yara= 0.05, respectively, how much should Yara offer for the boat?
Suppose that Rana's discount factor is discount factor for Rana = 0.20, and Yara’s discount factor =0.15.
How much should Yara offer for the boat? How does this offer differ from your r to part a, and why?
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