is the wage offered by the firm. If a firm fails to hire the worker, its payoff is 0.
Which game is most similar to the above hiring game in terms of strategic structure?

Question

BlackTom AI · Accepted Answer

The question as given appears to describe a hiring game where firms select a wage to offer the worker, and if a firm fails to hire the worker, its payoff is 0. The prompt asks which game is most similar in strategic structure to this hiring scenario.

Option availability note: The provided data shows an answer field containing 'Bertrand game' as the presumed correct choice, but there are no answer_options listed to analyze alongside. In a typical multiple-choice setup, we would evaluate each option for how well its strategic structure matches the hiring game. Since options are absent, I will first discuss the general logic of why the Bertrand framework is often invoked as a parallel for wage/price competition, and then acknowledge the limitation due to missing alternatives.

Why Bertrand game is plausibly the closest match:
- In a Bertrand-style game, firms compete by setting prices (or wages) rather than quantities, with the key feature being strategic undercutting: each firm’s best response depends on the price chosen by the rival, and undercutting can capture market payoff.
- Translating to the hiring context, if firms simultaneously choose wage offers, each firm’s payoff depends on whether it is the one that secures the worker. If both offer too low, neither obtains the worker and both get zero; if one offers a higher wage, the worker may accept the higher offer while the other remains unemployed. The strategic tension resembles undercutting in price competition, where each firm tries to offer a wage just competitive enough to attract the worker while not overpaying.
- The key structural similarity is the presence of competitive offers and the possibility of one player securing the outcome (hiring) by offering a more favorable (lower or strategically optimal) term than the rival, analogous to how the undercutting dynamic in Bertrand pricing determines market capture.

Why other potential options (in a complete set) might be incorrect would hinge on differences in strategic form:
- If an option described a Cournot-type game (quantity competition) rather than price/wage competition, that would mischaracterize the strategic vulnerability to undercutting versus capacity restraint.
- If an option framed the problem as a monopoly or a non-strategic fixed-payoff scenario, it would overlook the strategic interdependence between firms’ wage offers.
- If an option emphasized cooperative or collusive wage-setting, that would diverge from the unilateral incentives to undercut or outbid in a typical wage-competition model.

Given the typical mapping from wage-offer competition to price-based competitive models, the Bertrand framework is often asserted as the closest analog to a hiring/offer-under-cutting game, despite differences in the specific payoff structure for hiring vs. selling a product. If there were other options, we would compare them along the same lines: who benefits from undercutting, what happens when offers are identical, and whether the strategic outcome leads to undercutting equilibria or to some other equilibrium with split or failed hires.

Limitations: The absence of the listed answer choices in your data prevents a point-by-point comparison of each option. If you can share the full set of options, I can map each one directly to the hiring game's structure and explain why Bertrand is the best match (or not) with precise reasoning for each alternative.

23506 Strategic Decision Making and Game Theory - Autumn 2025 Exercises

is the wage offered by the firm. If a firm fails to hire the worker, its payoff is 0. Which game is most similar to the above hiring game in terms of strategic structure?

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