Consider the finite horizon alternating offer bargaining game we studied inlecture. Players 1 and 2 are bargaining over a unit sized pie. In every oddperiod player 1 makes an offer of a split (a real number between 0 and 1) toplayer 2. Player 2 may accept (then the game ends and the split isimplemented) or reject (then the game moves to the next period). In evenperiods, the players' roles are reversed: player 2 makes the offer and player 1accepts or rejects it. If an offer is accepted, then the game ends and the player'sreceive the agreed upon shares. If T offers are rejected, then the game endswith payoffs (0,0). Each player has a discount factor, but unlike in class, thediscount factors are not the same for each player. Specifically, player 1 hasdiscount factor d1 E (0, 1) and player 2 has discount factor d2 € (0, 1).Solve for the unique SPNE of this game.

In microeconomics, the concept of game theory has a unique SPNE which describes the situation where…

Consider the finite horizon alternating offer bargaining game we studied in lecture. Players 1 and 2 are bargaining over a unit sized pie. In every odd period player 1 makes an offer of a split (a real number between 0 and 1) to player 2. Player 2 may accept (then the game ends and the split is implemented) or reject (then the game moves to the next period). In even periods, the players' roles are reversed: player 2 makes the offer and player accepts or rejects it. If an offer is accepted, then the game ends and the play receive the agreed upon shares. If T offers are rejected, then the game ends with payoffs (0, 0). Each player has a discount factor, but unlike in class, th discount factors are not the same for each player. Specifically, player 1 has discount factor d1 € (0,1) and player 2 has discount factor d2 E (0, 1). Solve for the unique SPNE of this game.

Consider the finite horizon alternating offer bargaining game we studied in lecture. Players 1 and 2 are bargaining over a unit sized pie. In every odd period player 1 makes an offer of a split (a real number between 0 and 1) to player 2. Player 2 may accept (then the game ends and the split is implemented) or reject (then the game moves to the next period). In even periods, the players' roles are reversed: player 2 makes the offer and player accepts or rejects it. If an offer is accepted, then the game ends and the play receive the agreed upon shares. If T offers are rejected, then the game ends with payoffs (0, 0). Each player has a discount factor, but unlike in class, th discount factors are not the same for each player. Specifically, player 1 has discount factor d1 € (0,1) and player 2 has discount factor d2 E (0, 1). Solve for the unique SPNE of this game.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter8: Game Theory

Section: Chapter Questions

Problem 8.8P

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