Andrew Wants to Purchase Adam's Car

Multiple Choice

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 price should Andrew offer Adam in the first round?

A) An amount around $1,110.
B) An amount around $1,330.
C) An amount around $1,530.
D) An amount around $1,690.
E) An amount around $1,770.