Andrew wants to purchase Adam's car. Andrew is prepared to pay a maximum of $2,000. Adam is not willing to accept anything lower than $1,000. Suppose that any failure to reach an agreement reduces Andrew's and Adam's gain from reaching an agreement by 10 percent and 5 percent, respectively. If there is no limit to the number of negotiating rounds, what percentage of the bargaining surplus will Adam receive?
A) Around 51 percent.
B) Around 59 percent.
C) Around 69 percent.
D) Around 70 percent.
E) Around 72 percent.

Question

Quizplus · Accepted Answer

Adam will receive around 69 percent of the bargaining surplus due to the differing rates at which the failure to reach an agreement reduces their gains, with Andrew's gain decreasing faster than Adam's.

Andrew Wants to Purchase Adam's Car