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7. Ashley is negotiating an employment contract with a prospective employer, the La Jolla YMCA. The contract specifies two things: (1) Ashley's job de-
7. Ashley is negotiating an employment contract with a prospective employer, the La Jolla YMCA. The contract specifies two things: (1) Ashley's job de- scription, which is surfing instructor or tennis instructor, and (2) Ashley's play tennis, and she enjoys surfing more. If Ashley works as a surfing in- salary t. Ashley is better at teaching people to surf than teaching people to structor for the YMCA, then Ashley's payoff ist 10,000 and the YMCA'S payoff is 60,000-t. If Ashley works as a tennis instructor, then her payoff - ist - 20,000 and the YMCA's payoff is 65,000-t. If Ashley and the YMCA fail to reach an agreement, then the YMCA gets a payoff of 10,000 and Ashley obtains 20,000. In other words, the disagreement outcome of this negotiation problem is given by d = 20,000 and dy = 10,000. The value 20,000 is due to Ashley's outside opportunity, of 10,000 for the YMCA is due to it having to hire someone who is less which is to work as a writer for the San Diego Reader newspaper. The value skilled than Ashley. Solve this bargaining problem using the standard bargaining solution, under the assumption that Ashley and the YMCA have equal bargaining weights of 1/2. What job description and salary do they agree to? Explain.
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