In: Economics
Two friends are dividing a prize worth $10. Each of two players announces an integer a1 and a2 respectively between 0 and 10 both inclusive. If the sum of the numbers named is less than or equal to 10, they each get the number they named and the remainder is destroyed. If the sum a1 + a2 >10 and both claims are the same, then the prize is equally divided. If a1 + a2 >10 and the two integers named are different then minimum of the two claims gets the claimed amount and the other one gets the remainder if any.
Model as a strategic game
Does either player have any dominating strategy?
Is the game dominance solvable? If so, solve for the IEDS equilibrium to the game. If not, clearly mention the strategies that survive IEDS.