A2 Suppose that the proposer in the ultimatum game may not propose fractional amounts,and therefore must propose $0, $1, $2, .. or $10 (see figure below). As always, theresponder must Accept (A) or Reject (R).XX$0%3D$1$2$3$4$5$6$7$9$10$8R.($6,$4)($0,$0)(a) Suppose, first, that this game is played by two egoists, for whom u(x,y)%3Dx. What isthe Nash equilibrium?(b) Suppose, second, that this game is played by two altruists, for whomu(x, y) = 2/3x+ 1/3Vy. Find the new Nash Equilibrium.

A behavioral economics trading game that is played over multiple trials is called the ultimatum…

Suppose that the proposer in the ultimatum game may not propose fractional amounts, and therefore must propose $0, $1, $2, ...... or $10 (see figure below). As always, the responder must Accept (A) or Reject (R). $0 $1 $2 33 $3 $4 $5 $6 $7 $8 $9 $10 A R ($6,54) ($0,$0) (a) Suppose, first, that this game is played by two egoists, for whom u(x,y)=x. What is the Nash equilibrium? (b) Suppose, second, that this game is played by two altruists, for whom u(x, y) = 2/3√x + 1/3√y. Find the new Nash Equilibrium.

Suppose that the proposer in the ultimatum game may not propose fractional amounts, and therefore must propose $0, $1, $2, ...... or $10 (see figure below). As always, the responder must Accept (A) or Reject (R). $0 $1 $2 33 $3 $4 $5 $6 $7 $8 $9 $10 A R ($6,54) ($0,$0) (a) Suppose, first, that this game is played by two egoists, for whom u(x,y)=x. What is the Nash equilibrium? (b) Suppose, second, that this game is played by two altruists, for whom u(x, y) = 2/3√x + 1/3√y. Find the new Nash Equilibrium.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter15: Strategic Games

Section: Chapter Questions

Problem 15.2IP

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