1. Players 1 and 2 are bargaining over how to split 5 dollars. Player 1 proposes to take si dollars (81 should be an integer), leaving (5-81) dollars for player 2. Then player 2 either accepts or rejects the offer. If player 2 accepts the offer, then the payoffs are s₁ dollars to player 1, and (5-s₁) dollars to player 2. If player 2 rejects the offer, then the payoffs are zero to both. How many subgame-perfect Nash equilibria are there in the game?

1. Players 1 and 2 are bargaining over how to split 5 dollars. Player 1 proposes to take si dollars (81 should be an integer), leaving (5-81) dollars for player 2. Then player 2 either accepts or rejects the offer. If player 2 accepts the offer, then the payoffs are s₁ dollars to player 1, and (5-s₁) dollars to player 2. If player 2 rejects the offer, then the payoffs are zero to both. How many subgame-perfect Nash equilibria are there in the game?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter8: Game Theory

Section: Chapter Questions

Problem 8.7P

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