You play the following bargaining game. Player A moves first and makes Player B an offer for the division of $1000. (For example, Player A could suggest that she take $600 and Player B take $400.) Player B can accept or reject the offer. If he rejects it, the amount of money available drops to $800, and he then make an offer for the division of this amount. If Player A rejects this offer, the amount of money drops to $700 and Player A makes an offer for its division. If Player B rejects this offer, the amount of money drops to $0 and player A keeps the $700. Both players are rational, fully informed, and want to maximize their payoffs. Which player will do best in this game? Assume that monetary divisions must take the form of dollars (rather than cents or smaller denominations) and, in each round, a player will offer at least $1. The player that will do best in this game is because when following his optimal strategy he should receive a payoff of $. (Enter a numeric response using an integer.)

You play the following bargaining game. Player A moves first and makes Player B an offer for the division of $1000. (For example, Player A could suggest that she take $600 and Player B take $400.) Player B can accept or reject the offer. If he rejects it, the amount of money available drops to $800, and he then make an offer for the division of this amount. If Player A rejects this offer, the amount of money drops to $700 and Player A makes an offer for its division. If Player B rejects this offer, the amount of money drops to $0 and player A keeps the $700. Both players are rational, fully informed, and want to maximize their payoffs. Which player will do best in this game? Assume that monetary divisions must take the form of dollars (rather than cents or smaller denominations) and, in each round, a player will offer at least $1. The player that will do best in this game is because when following his optimal strategy he should receive a payoff of $. (Enter a numeric response using an integer.)

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter15: Imperfect Competition

Section: Chapter Questions

Problem 15.7P

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