Question

In: Economics

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 player amongst all NEs?

Solutions

Expert Solution

Sequential bargaining A classic economic is how people will begin over a pie of a certain size. One approach, associated with Nash (1950),is to specify a set of axiom that a reasonable or fair division should satisfy, and identify the division with these properties. Ultimate game a simple represented of alternating offers bargaining,with costly delay (Rubinstein bargaining .pie size M To divide two players. Economists were skeptical of Gas results insufficient experience.payoff too low. Stackelberg supply and the first mover advantage formal definition bargaining and discounted payoffs. U r not competition reminder. the players:2 firms,e.g.coke and Pepsi. Strategies quantities players produce of identical products: qi, q-i.products are perfect substitutes.The payoffs constant marginal cost of production c.stackelberg model assume now that one firm gets to move first and the other moves after. That is one firm gets to set the quantity first.Is it an advantage to move first? Or it is better to wait and see what the other firm doing and then react? .The NIM game we have two players there are two piles of stones, A and b each player, in turn, decodes to delete some stones from whatever pile. The player that remains with the last stone wins. Perfect information and pure strategy a game of perfect information is one in which at each node of the game tree, the player whose turn is to move knows which node she is at and how she got there. Nash equilibrium is a game theory. The concept that determines the optimal solution in a non cooperative game in which each player lacks any incentive to change his her initial strategy.Under the Nash equilibrium, a player does not gain anything from deviating from their initially chosen strategy. Nash equilibrium is one of the fundamental concepts in game theory. It conceptualized the behavior and interaction between game participate to determine the best outcomes. It's also predicting the decision of the player if they are making decisions at the same time and the decision of one player takes into account the decision of other players. Nash equilibrium was discovered by American mathematician John Nash. He was awarded the Nobel Prize in economics in 1994 for his contribution to the development of game theory.

There are may types of game theory cooperative and non cooperative game theory are the most common.cooperative game theory deals with how coalition or cooperative groups interact when only the payoff are known. It is a game between coalition of players rather than between individuals.prisoners dilemma is the most well known example of two criminals arrested for acting


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