1) The union and the firm are bargaining over a wage. The union's wage strategy is to offer Wu (t) = wu0 exp{-.01t} where wuo is the union's initial offer and t measures the length of the strike in weeks. The firm's strategy is to offer Wf (t) = wfo exp{.02t} where is the firm's initial offer. W f0 If wuo 100 and wfo=50, how long does the strike last? How does your answer change if wu (t) and wf (t) are common a) b) knowledge?

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1) The union and the firm are bargaining over a wage. The union's wage strategy
is to offer
Wu (t) = wu0 exp{-.01t}
where wuo is the union's initial offer and t measures the length of the strike in
weeks. The firm's strategy is to offer
Wf (t) = wfo exp{.02t}
where
is the firm's initial offer.
W f0
If wuo
100 and wfo=50, how long does the strike last?
How does your answer change if wu (t) and wf (t) are common
a)
b)
knowledge?
Transcribed Image Text:1) The union and the firm are bargaining over a wage. The union's wage strategy is to offer Wu (t) = wu0 exp{-.01t} where wuo is the union's initial offer and t measures the length of the strike in weeks. The firm's strategy is to offer Wf (t) = wfo exp{.02t} where is the firm's initial offer. W f0 If wuo 100 and wfo=50, how long does the strike last? How does your answer change if wu (t) and wf (t) are common a) b) knowledge?
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