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![Alice and Bob negotiate over a deal which generates a surplus of 10 (payoffs in
thousands of dollars). They negotiate as in the standard Rubinstein Stahl
bargaining model from Chapter 11- Alice offers x, € [0,10] representing her share
of the surplus, Bob accepts or rejects, if Bob rejects then the roles reverse and Bob
offers x2 € [0,10], and so on – with a twist: There is no time discount. Instead, the
size of the surplus remains the same (so, offers are always from 0 to 10), but for
every rejection, both players' payoffs are reduced by 1 to pay for lawyer fees. (Ex: if
there are two rejections and then an acceptance of an offer of x3 = 5, then the
payoffs are 3 and 3).
a. Solve the SPNE for the ultimatum game (T=1).
Bob accepts any offer x, s 10. Alice sets x,
= 10.
b. Describe the SPNE outcome (does agreement occur, when, who offers, what is
the offer) for T=3.
c. Describe the SPNE outcome for T=4.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F77914a6f-d94d-4e53-9f8c-c34eddc60977%2Feaeeed64-a49d-4cc2-a78f-7c7f70f015aa%2Ftegew3r_processed.jpeg&w=3840&q=75)
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- Assume that two people are bargaining over how to split the surplus of their joint efforts, which total $100. The only difference between the two is that player A has an associated interest rate of 5 percent and player B has an associated interest rate of 20 percent. Based on Nash bargaining theory, what share of the $100 ill Player A wind up with? (Please provide your answer in $ style format)Consider a V-period alternating-offer bargaining game where two players bargain over a surplus initially equal to a whole-number amount V. That is, player 1 makes an offer in period 1; if player 2 rejects this offer, player 2 makes an offer in period 2; if player 1 rejects this offer, player 1 then makes another offer in period 3; and so on. Suppose that the available surplus decays by a constant value of c = 1 each period. (For example, if the players reach an agreement in period 2, they divide a surplus of V – 1.) If in period V, no agreement is reached, then both players get 0. Suppose that the players don't discount the future. Describe the subgame perfect Nash equilibrium of this game.Consider the following scenarios in the Ultimatum game, viewed from the perspective of the Recipient. Assume that the Recipient is motivated by negative reciprocity and will gain $15 of value from rejecting an offer that is strictly less than 50 percent of the total amount to be divided between the two players by the Proposer. Assume that the Proposer can only make offers in increments of $1. If the pot is $30, what is the minimum offer that the Responder will accept? What percent of the pie is this amount? The minimum offer that will be accepted is S. which represents percent of the pie. If the pot is $100, what is the minimum offer that the Responder will accept? What percent of the pie is this amount? The minimum offer that will be accepted is S, which represents percent of the pie. (Round answers to 2 decimal places as needed)
- You are the manager of a golf course. For simplicity assume that you only have two potential customers – a high demand customer whose inverse demand for golf services is given by P = 10 – 0.5Q and a low demand customer whose inverse demand for golf services is given by P = 8 – 0.5Q. Suppose the marginal cost to the golf course of each round of golf is zero.Suppose you have to charge both players the same two-part pricing strategy. Which of the following pricing strategies will yield the highest profit for you? A. Charge a fixed fee of €100 and a per unit fee of zero B. Charge a fixed fee of €64 and a per unit fee of zero C. Charge a fixed fee of €64 and a per unit fee of €4 D. Charge a fixed fee of €128 and a fixed fee of zero.Suppose players A and B play a discrete ultimatum game where A proposes to split a $5 surplus and B responds by either accepting the offer or rejecting it. The offer can only be made in $1 increments. If the offer is accepted, the players' payoffs resemble the terms of the offer while if the offer is rejected, both players get zero. Also assume that players always use the strategy that all strictly positive offers are accepted, but an offer of $0 is rejected. A. What is the solution to the game in terms of player strategies and payoffs? Explain or demonstrate your answer. B. Suppose the ultimatum game is played twice if player B rejects A's initial offer. If so, then B is allowed to make a counter offer to split the $5, and if A rejects, both players get zero dollars at the end of the second round. What is the solution to this bargaining game in terms of player strategies and payoffs? Explain/demonstrate your answer. C. Suppose the ultimatum game is played twice as in (B) but now there…Suppose that Yara wants to purchase a boat from Rana. Yara is willing to pay up to $18,000, while Rana is not willing to accept any offer below $15,000. Assume that there are a finite number of negotiating rounds. If the discount factors for Rana and Yara are discount factor for Rana= 0.05 and discount factor for Yara= 0.05, respectively, how much should Yara offer for the boat? Suppose that Rana's discount factor is discount factor for Rana = 0.20, and Yara’s discount factor =0.15. How much should Yara offer for the boat? How does this offer differ from your r to part a, and why?
- Mr. Ward and Mrs. Ward typically vote oppositely in elections, so their votes “cancel each other out.” They each gain 10 units of utility from a vote for their positions (and lose 10 units of utility from a vote against their positions). However, the bother of actually voting costs each 5 units of utility. The following matrix summarizes the strategies for both Mr. Ward and Mrs. Ward. Using the given information, fill in the payoffs for each cell in the matrix. For example, in the top left cell, fill in the payoffs for Mr. Ward and Mrs. Ward if they both vote. (Hint: Be sure to enter a minus sign if the payoff is negative.) Mrs. Ward Vote Don't Vote Mr. Ward Vote Mr. Ward: , Mrs. Ward Mr. Ward: , Mrs. Ward Don't Vote Mr. Ward: , Mrs. Ward Mr. Ward: , Mrs. WardH6. Consider the GSP auction used by Google for selling its advertising slots. Suppose there are two slots and three bidders. The clicks received by slots 1 and 2 are 500 and 300, respectively. The three bidders 1,2, and 3 have values 10, 8, and 5 respectively for a click. As usual, we consider Symmetric Nash Equilibria (SNE). In particular, you need to focus on the SNE equilibrium bids that are optimal for Google. Write down the corresponding SNE bid submitted by bidder 2. Use the decimal representation, not the fraction.9. There are four agents who are trying to decide whether they will buy a publicly shared TV, of which the total cost is $200. The valuations of the TV are $30 for agent 1, S35 for agent 2, $70 for agent 3, and $70 for agent 4. Let c; be how much agent i will pay if the TV is purchased. Suppose c = 20, c2 = C3 = C4 = 60. According to Groves and Clarke mechanism, which one could not be the pivotal agent? A. agent 1 B. agent 2 C. agent 3 D. agent 4
- Suppose that Lionel Messi is negotiating a contract with FC Barcelona. Messi has an offer from Real Madrid for $20 million a year. If he signs with FC Barcelona, they will earn $90 million in revenue from the signing. FC Barcelona's next best option is to sign Cristiano Ronaldo. They would earn $70 million from signing Ronaldo and would pay him a contract of $10 million. Messi's bargaining power is w = 1/2. a) What is the negotiated salary between Messi and FC Barcelona under Nash Bargaining? What is Messi's surplus and what is FC Barcelona's surplus? b) Due to an injury, FC Barcelona would only earn $50 million from signing Ronaldo but everything else remains the same. What is the negotiated salary between Messi and FC Barcelona under Nash Bargaining? What is Messi's surplus and what is FC Barcelona's surplus?Consider two restaurants located next door to each other: Quick Burger and The Sunshine Café. If Quick Burger opens a drive-through window, the increased traffic and noise will bother customers seated outside at The Sunshine Café. The accompanying table shows the monthly payoffs to Quick Burger and The Sunshine Café when Quick Burger does and does not operate a drive-through window. Quick Burger Operates a Quick Burger Does Not Drive-Through Window $ 24,000 $ 17,000 Operate Drive-Through Window $ 20,000 $ 23,000 Quick Burger The Sunshine Café Suppose Quick Burger has the legal right to operate a drive-through window, and Quick Burger and the Sunshine Café can negotiate with each other at no cost. Which of the following arrangements would lead to the socially optimal outcome? Multiple Choice The Sunshine Cafe pays Quick Burger $5,000 per month not to operate the drive-through window. The Sunshine Cafe pays Quick Burger $12,250 not to operate the drive-through window. Quick Burger pays…Consider the following simplified bargaining game. Players 1 and 2 have preferences over two goods, x and y. Player 1 is endowed with one unit of good x and none of good y, while Player 2 is endowed with one unit of y and none of good x. Player i has utility function: min{xi, yi} where xi is i's consumption of x and yi his consumption of y. The "bargaining" works as follows. Each player simultaneously hands any (nonnegative) quantity of the good he possesses (up to his entire endowment) to the other player. (a) Write this as a game in normal form. (b) Find all pure strategy equilibria of this game. (c) Does this game have a dominant strategy equilibrium? If so, what is it? If not, why not? Please show all work. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.