Microeconomics
21st Edition
ISBN: 9781259915727
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 8, Problem 11DQ
To determine
Self-interest behavior.
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4. Suppose that there is a negotiation between two players over a painting. Person 1, the
seller, has no interest in the painting. On the other hand the painting is worth $100 to the
buyer. If the painting is sold at a price in between 0 and 100, both are better off. Player 1
proposes a price p to player 2. Then, after observing player 1's offer, player 2 decides
whether to accept it or to reject it. If the offer is rejected both get zero and the game ends.
Find the unique SPNE of this game.
4. Consider a three-player bargaining, where the players are negotiating over
a surplus of one unit of utility. The game begins with player 1 proposing
a three-way split of the surplus. Then player 2 must decide whether to
accept the proposal or to substitute for player 1's proposal his own alternative
proposal. Finally, player 3 must decide whether to accept or reject current
proposal (it is player 1's if player 2 accepts or player 2's if player 2 offer a
new one). If he accepts, then the players obtain the specified shares of the
surplus. If player 3 rejects, then the players each get 0.
(a) Draw the extensive form game of this perfect-information game.
(b) Determine the subgame perfect NE.
10. Player A and Player B are playing a game . First , Player A chooses to either " Keep " or " Pass " . Second , Player B observes A's choice and Player B then chooses to either Keep or Pass . This process continues which creates the sequential game below .
Please mark decisions that rational and selfish players will choose at every decision node ( 3 decisions by player A and 3 decisions by player B ) - mark them on the Figure . What is the equilibrium of this game ?
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