Question
These are three consulting firms hiring this year: Nous Group, BCG, and McKinsey. John will graduate from the MBA program at UoL and would like
These are three consulting firms hiring this year: Nous Group, BCG, and McKinsey. John will graduate from the MBA program at UoL and would like to find a job in consulting. John currently works as an intern at Nous. At the end of the internship, Nous will offer John a permanent position at the firm. If John rejects the offer, he can then go to the job market, where BCG and McKinsey can simultaneously make offers to John. The game is as follows. First, Nous offers a wage wn to John. John can either accept or reject the offer. If John accepts Nous's offer, the game is over. If he rejects it, then BCG and McKinsey secretly and simultaneously offer wages wb and wm. John can then accept BCG's offer (wb), or accept McKinsey's offer (wm), or reject both offers. John can generate a revenue of 100 for Nous but only of 50 for BCG or McKinsey. The payoff to a firm is the revenue generated by john, minus his wage if John accepts its offer, and zero if John rejects it. The payoff to John is the wage offered by the firm whose offer he accepts, and zero if he rejects all offers. As a tie-breaking rule assume that if John is indifferent between accepting and rejecting an offer at a given decision node, then he accepts it. Also, assume that if John is indifferent between accepting BCG's offer and McKinsey's offer, then he flips a coin to decide.
Question. Consider the entire game. What is the credible Nash equilibrium? Describe the players' strategies. What is the outcome of the game?
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