Assume this is a sequential game. If employer A offers a low salary, you, as the employee, are best served by V the offer. In this case, you would earn a payoff of V , and employer A would earn a payoff of V . Alternatively, if employer A offers a high salary, you are best sewed by v the offer. In this case, you would earn a payoff of V , and employer A would earn a payoff of V . With this information, employer A will choose to make a V offer, since it will yield a higher payoff for her, based on what you (the employee} will subsequently choose. Suppose you have a competing job offer from employer B. Accepting this job offer gives a payoff of 78. During your negotiations with employee A, you have the option of taking this offer from employer B, and employer A is aware of this offer (as well as the payoff to you). Given this competing offer, the negotiation with employer A is depicted in the following gure: ('2) Employee Accept Employee 97 EmployerA: 59 Employee Reject EmployerA: 0 Employee 78 Employee Accept Employee 59 EmployerA: 9? Employee Reject Employee 78 EmployerA: U True or False: With this competing job offer, your threat to reject employer A's offer, if it is low, is now credible. 0 True 0 False 3 . Individual Problems 15-4 After graduation, you enter salary negotiations for your first job. Suppose the potential employer (employer A) has two choices: to offer you a high salary or to offer you a low salary. You may then accept or reject whatever offer is made. The payoffs, as well as the decision tree, are depicted in the following figure. Employee Accept Employee: 97 Employer A: 59 High Offer Employee Reject Employee: 0 Employer A: 0 Employer Employee Accept Employee: 59 Employer A: 97 Low Offer Employee Reject Employee: 0 Employer A: 0