Question

Suppose a manager and a worker interact as follows. The manager decides whether tohire or not hire the worker. If the manager does not hire the worker, then the gameends. When hired, the worker chooses to exert either high effort or low effort. Onobserving the worker’s effort, the manager chooses to retain or fire the worker. In thisgame, does “not hire” describe a strategy for the manager? Explain.

Answer 1

Yes, "Not hire" is a strategy of the manager. A strategy can be defined as an act of the player which he can take in a situation where the outcome depends on his decision. A strategy defines the action the player will take throughout the game. And the players will make their move or decision based on the strategies they have.

Here, in the given game the manager has two different strategies to "Hire" or to "not hire" and the manager will make the move according to this given strategies. the worker has two strategies to "work hard" and "not work hard". Both the players will choose their strategies to make a move in the game.