A Bargaining Game Two players, PI and PII, have to divide 23 M&M's: 12 regular ones (R's) and 11 peanut-coatedones (P's). PI likes both types equally but PII likes only the P's (she will have no use for anyR's she gets). Moreover, both players' preferences are known to both and the bargaining willbe restricted to the allocations of M&M's, e.g., no monetary side payments or othermodifications involved. (a) PI Divides and PII Chooses: PI divides the M&M's into two piles in any way hechooses. Then PII selects one of the piles, leaving the other one to PI. What will bethe outcome of this game? (b) PII Divides and PI Chooses: The same as in Problem 1, but with the order reversed.What will be the outcome?

A Bargaining Game Two players, PI and PII, have to divide 23 M&M's: 12 regular ones (R's) and 11 peanut-coatedones (P's). PI likes both types equally but PII likes only the P's (she will have no use for anyR's she gets). Moreover, both players' preferences are known to both and the bargaining willbe restricted to the allocations of M&M's, e.g., no monetary side payments or othermodifications involved. (a) PI Divides and PII Chooses: PI divides the M&M's into two piles in any way hechooses. Then PII selects one of the piles, leaving the other one to PI. What will bethe outcome of this game? (b) PII Divides and PI Chooses: The same as in Problem 1, but with the order reversed.What will be the outcome?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter8: Game Theory

Section: Chapter Questions

Problem 8.9P

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