1)In the Rubinstein bargaining game of dividing the dollar, if we let the horizon go to...

1)In the Rubinstein bargaining game of dividing the dollar, if we let the horizon go to infinity, what will be the subgame perfect equilibrium? Assume A’s discount factor is α and B’s discount factor is β.

Hint: The equilibrium is stationary, where each player offers the same pair of payoffs whenever it is his turn to make an offer.

Solutions

Expert Solution

Let person 1 discount factor is 1

& Person 2 discount factor is 2

Then.

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

In the collusion game, we found that collusion was only sustainable in the infinite horizon repeated...

In the collusion game, we found that collusion was only sustainable in the infinite horizon repeated game. One Nash Equilbrium of that game can be found when all players play a “grim trigger” strategy, where they collude until an opponent chooses to compete, and then compete for all future rounds as a punishment. In such a game, if the one period bonus that comes from competing is low enough, firms always collude and the punishment is never triggered. However, let’s...

In the sequential bargaining game with ∞ <T rounds where player 1 is the first proposer...

In the sequential bargaining game with ∞ <T rounds where player 1 is the first proposer and if the player 2 rejects the offer, the game goes to the second round where they switch roles (the payoff is (s, 1-s) if responder accepts the offer) how do I find the followings? 1. A Nash Equilibrium that is not a SPE. 2. Nash Equilibrium which is different from the first question and which offers the highest possible payoff to the second...

Write a simple menu-driven program called “Million Dollar Game”. The dice that we are using for...

Write a simple menu-driven program called “Million Dollar Game”. The dice that we are using for this game are special oriental dice. Each die has six different patterns. The six possible patterns are: Fish, Shrimp, Crab, Chicken, goldenCoin, Barrel. This game has three dice. In this game, the player can place his or her bet on any die-pattern. The amount of the winning prize is directly proportional to the number of matched dice after the two dice have been tossed...

Profit margin measures the income earned on each dollar of sales, and is caculated by dividing...

Profit margin measures the income earned on each dollar of sales, and is caculated by dividing net income by net sales. True False Other things being equal, the higher the debt to equity ratio, the higher the risk of bankruptcy. True False We use horizontal analysis to analyze trends in financial statement data, such as the dollar amount of change and the percentage change, for one company over time True False

Bargaining can be viewed strategically, as a game of chicken where the ability to commit to...

Bargaining can be viewed strategically, as a game of chicken where the ability to commit to a position allows a player to capture the lion’s share of the gains from trade. Do you agree with this concept? What have you observed about bargaining situations? PLEASE DONT TAKE OTHER PEOPLE'S ANSWERS!

Strategic bargaining is focused on the rules of the game. However, in real-life situations the rules...

Strategic bargaining is focused on the rules of the game. However, in real-life situations the rules are not always clearly pronounced. This form of bargaining works best when all parties are sure that the rule will be followed. Strategic bargaining often focuses on who moves first and who can commit to a bargaining position. An example of this type of bargain could be when two business partners are negotiating a new business contract. Both want to get the most of...

Question 5. Set up the game for AYK model for bargaining and explain how access to...

Question 5. Set up the game for AYK model for bargaining and explain how access to abortions changes the Nash equilibrium and we would observe an increase in nonmarital fertility in the society.

Let G be a group of order p am where p is a prime not dividing...

Let G be a group of order p am where p is a prime not dividing m. Show the following 1. Sylow p-subgroups of G exist; i.e. Sylp(G) 6= ∅. 2. If P ∈ Sylp(G) and Q is any p-subgroup of G, then there exists g ∈ G such that Q 6 gP g−1 ; i.e. Q is contained in some conjugate of P. In particular, any two Sylow p- subgroups of G are conjugate in G. 3. np ≡...

Find the total number of Nash equilibria of the “divide a dollar” game.

A Civil Dispute as a Bargaining Game Because trials are costly, both parties can usually gain...

A Civil Dispute as a Bargaining Game Because trials are costly, both parties can usually gain by settling out of court. That is why so few disputes ever come to trial. As we will see in Chapter 10, the best current estimate is that approximately 5 percent of all disputes that reach the stage of filing a legal complaint in the United States actually result in litigation. Here is a problem in which you must apply bargain- ing theory to...

Subjects