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 $3 million). Each side can choose to hire, or not hire, an expensive labor lawyer (at a cost of $100,000) 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 four fifths, or 0.8, 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)
Labor (L)		No Lawyer	Lawyer
No Lawyer	L: $	M: $	L: $	M: $
Lawyer	L: $	M: $	L: $	M: $

The Nash equilibrium for this game is for Management to (HIRE OR NOT HIRE)a lawyer, and for Labor to (HIRE OF NOT HIRE) a lawyer.