Ainslie is in a team with Michelle and together they must produce a report for their boss. To determine who will do the work, they engage in the following negotiations: Ainslie can propose that either she does the work, or that Michelle does the work. Michelle can then accept or reject Ainslie's offer. If Ainslie offers to do the work, and Michelle accepts this offer, Ainslie gets a payoff of 20 and Michelle a payoff of 40. If Michelle rejects this offer both get a payoff of 10 . If Ainslie suggests Michelle do the work and Michelle accepts, the payoffs are 50 to Ainslie and 20 to Michelle. If Michelle rejects Ainslie's suggestion that Michelle is the one who should complete the work, Ainslie has an opportunity to respond. At this juncture, Ainslie can opt not to do the work, and both workers get a payoff of 10 . If Ainslie chooses to do the work, she receives a payoff of 15 and Michelle gets a return of 50 . What is the outcome of this negotiation process? Ainslie suggests Michelle do the work, and Michelle refuses; Ainslie then chooses to do the work. Ainslie suggests Michelle do the work, and Michelle accepts. Ainslie suggests Michelle do the work, Michelle refuses; Ainslie then chooses not to do the work. Ainslie suggests that she does the work herself, and Michelle refuses. Ainslie suggests she does the work, and Michelle accepts. Consider the CBA negotiating with Myer regarding the rate of interest for a loan. The CBA can offer any interest rate r between 0 and 10 . If Myer accepts the payoff to the CBA is r, and the payoff to Myer is 10 r. If Myer rejects the offer the payoffs are 0 to the CBA and 4 to Myer. What do we observe in the credible (subgame perfect) equilibrium of this negotiation? The CBA offers r=0 and Myer accepts The CBA offers r=4 and Myer accepts The CBA offers r=6 and Myer accepts The CBA offers r=10 and Myer accepts The CBA offers r=10 and Myer rejects