Two individuals are in negotiations to terminate a contract. Person A, was the signatory to the control that she had to execute in partnership with Person B and is in possession of the pay- out. The contract is worth R1 000. The mediator asks Person A to choose how much of this contract value she is willing to offer person B. Person B, will then be asked to decide whether to accept the offer or reject it. If Person B rejects the offer, neither player receives any money. Using table or decision tree illustrate the possible payoffs. Determine if Nash equilibrium exist.

Two individuals are in negotiations to terminate a contract. Person A, was the signatory to the control that she had to execute in partnership with Person B and is in possession of the pay- out. The contract is worth R1 000. The mediator asks Person A to choose how much of this contract value she is willing to offer person B. Person B, will then be asked to decide whether to accept the offer or reject it. If Person B rejects the offer, neither player receives any money. Using table or decision tree illustrate the possible payoffs. Determine if Nash equilibrium exist.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter8: Game Theory

Section: Chapter Questions

Problem 8.9P

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