b) Two players, both with zero wealth, bargain over how to divide £X > 0 between them. Failure to reach agreement means both get nothing. Both players are expecled utility max- imisers. Player 1 has utility u(x) = x", where 0 < a < 1. Player 2 has utility u(x) = x, where 0< B <1. Determine the Nash solution for this problem and discuss.

b) Two players, both with zero wealth, bargain over how to divide £X > 0 between them. Failure to reach agreement means both get nothing. Both players are expecled utility max- imisers. Player 1 has utility u(x) = x", where 0 < a < 1. Player 2 has utility u(x) = x, where 0< B <1. Determine the Nash solution for this problem and discuss.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter8: Game Theory

Section: Chapter Questions

Problem 8.6P

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