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.

Expert Solution

Let person 1 discount factor is 1

& Person 2 discount factor is 2

Then.

Rahul Sunny answered 2 years ago

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