Every year, management and labor renegotiate a new employment contract by sending their proposals to an arbitrator, who chooses the best proposal (effectively giving one side or the other $5 million). Each side can choose to hire, or not hire, an expensive labor lawyer (at a cost of $200,000) who is effective at preparing the proposal in the best light. If neither hires a lawyer or if both hire lawyers, each side can expect to win about half the time. If only one side hires a lawyer, it can expect to win nine tenths, or 0.9, of the time.

Use the given information to fill in theexpected payoff, in dollars, for each cell in the matrix. (Hint: To find the expected payoff, multiply the probability of winning by the dollar amount of the payoff. Be sure to account for lawyer costs, which are incurred with certainty if a lawyer is hired.)

Management (M)

No Lawyer Lawyer

Labor (L) No Lawyer L: $, M: $, L:$, M: $

Lawyer L: $, M: $, L:$, M: $

The Nash equilibrium for this game is for Management to____________(hire, not hire)a lawyer, and for Labor to____________(hire, not hire)a lawyer.

This is the complete question, reentering again

Every year, management and labor renegotiate a new employment contract by sending their proposals to an arbitrator, who chooses the best proposal (effectively giving one side or the other $5 million). Each side can choose to hire, or not hire, an expensive labor lawyer (at a cost of $200,000) who is effective at preparing the proposal in the best light. If neither hires a lawyer or if both hire lawyers, each side can expect to win about half the time. If only one side hires a lawyer, it can expect to win nine tenths, or 0.9, of the time.

Use the given information to fill in theexpected payoff, in dollars, for each cell in the matrix. (Hint: To find the expected payoff, multiply the probability of winning by the dollar amount of the payoff. Be sure to account for lawyer costs, which are incurred with certainty if a lawyer is hired.)

Management (M)No LawyerLawyerLabor (L)No LawyerL:,M:L:,M:LawyerL:,M:L:,M:

The Nash equilibrium for this game is for Management to___________a lawyer, and for Labor to_________a lawyer.