Ps1 - becomes binding. Suppose it is common knowledge that...

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Professor Rod Garratt Winter 2011 ECON 210B Problem Set #1 Due: Wednesday January 19 1. In professional baseball there is an interesting arbitration process. If the team and the player cannot agree on the terms of the player’s contract then each side submits a salary to the arbitrator. The arbitrator chooses one salary or the other (not a compromise) and that salary
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Unformatted text preview: becomes binding. Suppose it is common knowledge that the arbitrator has in mind a salary of $ V and that he will choose whichever of the salaries proposed by the team and the player is closest to $ V . Draw the reaction correspondences (ie. best response sets) for the team and the player and identify the Nash equilibrium. Exercises 18.2, 19.1, 24.1 and 27.2....
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This note was uploaded on 12/26/2011 for the course ECON 210B taught by Professor Garratt during the Fall '09 term at UCSB.

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