4. Suppose that there is a negotiation between two players over a painting. Person 1, the seller, has no interest in the painting. On the other hand the painting is worth $100 to the buyer. If the painting is sold at a price in between 0 and 100, both are better off. Player 1 proposes a price p to player 2. Then, after observing player 1's offer, player 2 decides whether to accept it or to reject it. If the offer is rejected both get zero and the game ends. Find the unique SPNE of this game.

4. Suppose that there is a negotiation between two players over a painting. Person 1, the seller, has no interest in the painting. On the other hand the painting is worth $100 to the buyer. If the painting is sold at a price in between 0 and 100, both are better off. Player 1 proposes a price p to player 2. Then, after observing player 1's offer, player 2 decides whether to accept it or to reject it. If the offer is rejected both get zero and the game ends. Find the unique SPNE of this game.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter8: Game Theory

Section: Chapter Questions

Problem 8.9P

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