A Refer to Figure
In this figure, the market envelope offers wagesafey combinations with wages between $
and
and
Enter lower value betore higher value
Based on this figure we expect the more riskawarse individual to be employed with wage $
and safety level
The less riskaverse indwidual will have satay reduced by
relative to the riskaverse
individual and in compensation will be paid $
more. The absolute slope of the wagesafety
locus is
B Refer to Figure
show thme Remanns
At the threat point, the union's payoff is
and the firm's payoff is
The point A has product of gains equal to
If there is only one round of bargaining, this
point
Enter for Ofor "may or may not be for is not" a Nash solution.
If there are multiple rounds of bargaining and the firm makes the first offer, the Rubinstein outcome will give union
payoff
and firm payof
