Firm a judges that firm b would accept a 45 percent share


Firms A and B are negotiating to conclude a business deal worth $200,000 in total value to the parties. At issue is how this total value will be split. Firm A knows B will agree to a 50-50 split, but it also has thought about claiming a greater share by making a take-it-or-leave-it offer. Firm A judges that firm B would accept a 45 percent share with probability .9, a 40 percent share with probability .85, and a 35 percent share with probability .8. What offer should A make to maximize its expected profit?

Solution Preview :

Prepared by a verified Expert
Microeconomics: Firm a judges that firm b would accept a 45 percent share
Reference No:- TGS01173527

Now Priced at $15 (50% Discount)

Recommended (95%)

Rated (4.7/5)