The Baseball Players’ Association has voted to go on strike if a settlement is n

Question

The Baseball Players’ Association has voted to go on strike if a settlement is not reached with the owners within the next month. The players’ representative, Melvin Mulehead, has two strategies (containing different free agent rules, pension formulas, etc.); the owners’ representative, Roy Stonewall, has three counterproposals. The financial gains, in millions of dollars, from each player strategy, given each owner strategy, are shown in the following payoff table:

                                        Owner Strategy

Player Strategy             A                   B                  C

1                                $15                 $9               $11

2                                 $7                 $20               $12

a. Determine the initial strategy for the players and for the owners.

b. Is this a pure or a mixed strategy game? Explain.

Explanation / Answer

a)

initial strategy of player - 20$

initial strategy of owner - 7$

b)

Owner strategy B and player strategy 2 is more profitable

so it will be mixed strategy game

This is a mixed strategy game because the strategies selected by the Players and Owners don’t result in an equilibrium point. If this was a pure strategy game, the optimal strategy for the Player and the Owner would result in the same payoff or equilibrium point .

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