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Pinnacle Manufacturing Company

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There are only two pure-strategy equilibrium, which management and labor can be taken. Where the first strategy in which one player bargains hard and the second strategy in which second player bargains nice are equilibria. --- If the Labor chooses to move first or bargain hard then the management will do better by bargain hard. --- The terms and conditions of the agreement determent my options and alternatives. However, to avoid the extra fees in the last minutes, I believe the best answer is pre-sign all the closing documents per the current terms and not attend the closing. If I send an attorney authorized to close only per the previously negotiated terms and there some additional charges, I may cancel the agreement. This will lead me to …show more content…

--- When a company sells their organization in the auction, the majority of managers who working in the same industry field of this company have full knowledge of the financial position of the firm and its market value and also, the amount of return on investment in this company in the short and long term. Which means they have more information about this organization than others. This will lead to the reluctance of investors to invest or high bids on this company. It might be also, they are unable to pay the financial obligations of the company or the actual value of this company. --- If the probability of regular workers is 70%, the expected of this productivity is 0.70 * $100,000 = $70,000. If the probability of exceptional workers is 30%, the expected of this productivity is 0.30 * $120,000 = $36,000. As a result, the average of productivity is $70,000 + $36,000 = $106,000. Therefore, the employer should offer $106,000. However, if the employer hired regular employee, the employer will lose $6,000 per-employee ($100,000-$106,000), but if the employer hired exceptional worker, the employer will save $14,000 per-employee …show more content…

Therefore, all the examples can be an example of a signal. --- We should use expected value of random formula, E[X]= P1 * X1+…+Pn*Xn and then we should find the average of the expected value. --- Consequently, there will be only two employees will accept the $65,000 offers, which they are $50,000 and $60,000 employees. Since it is not logical for the employer to give offer to the employees over than their value, we should find the average of expected value of $50,000 and $60,000, which is $50,000 + $60,000 = $55,000 employees. Thus, it is sensible to offer only $50,000. --- Because moral hazard is the result of the hidden actions/information, which it can lead people to take different behaviors on based on the information that they own or have. --- Because lenders want to avert to give the loans to riskier people (Reduce Risks).

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