Construct a sequential equilibrium for the bargaining game

Assignment Help Microeconomics
Reference no: EM13870256

Consider the following incomplete information variation on the Ru­ binstein model. Two players are bargaining over splitting $10.00. They take turns making offers, with discount factor 6 = .999999 applied every time an offer is rejected. Player 1 seeks to maximize her expeeted payoff. There is incomplete information about player 2. Player 1 assesses prob­ ability 7f that player 2 seeks to maximize his expected payoff, and she assesses probability 1 -7f that he will ask for $8.00 precisely every time he is able to offer, and he will resolutely turn down any offer that leaves him with less than $8.00.

(a) Construct a sequential equilibrium for this bargaining game for the case 7f = .2. (This is hard, but not impossible.)

(b) Construct a sequential equilibrium for this bargaining game for the case 7f = .8. (This is harder.)

(c) Construct a sequential equilibrium for every possible value of 7f (and, in particular, for 7f very close to one). (Good luck!)

Reference no: EM13870256

Questions Cloud

Assume eat the big mac outside in a public park : Assume you eat the Big Mac outside in a public park. You realize that the Big Mac tastes pretty bad. Due to that you get upset. You toss the food on the lawn in the park and walk off. Does your behavior now create an externality? Might there be a jus..
Compute revised profit on one unit of the heavy-duty machine : Prepare a Statement of Cost of Goods Manufactured and an Income Statement for the month of May - calculate the over/under applied overhead - what is the estimated total cost of manufacturingone unit for each type of ventilation machine?
Private saving,national saving, and investment : Suppose GDP equals $10 trillion,consumption equals $6.5 trillion,the government spends $2 trillion and has a budget deficit of $300 billion. Find public saving, taxes, private saving,national saving, and investment.
What does it mean when substitution effect equal zero : What does it mean when substitution effect equal zero? explain with graph and example what does it mean when income effect equal zero? explain with graph and example
Construct a sequential equilibrium for the bargaining game : Construct a sequential equilibrium for this bargaining game for the case 7f = .2. (This is hard, but not impossible.) Construct a sequential equilibrium for this bargaining game for the case 7f = .8. (This is harder.)
Summarize and analysis article - the music man : Summarize and analysis these given articles-  GUYS IN SUITS WITH CHARTS: AUDIENCE RESEARCH IN U.S. PUBLIC RADIO by Alan G. Stavitsky and The Music Man
Describe the pure strategy equilibria that leave money : Describe the pure strategy equilibria that leave money on the table (if any exist). Are the equilibria you describe subgame perfect?
Real gdp is the total market value of the final goods : Assume that, in the population, 95 million people worked for pay last week, 5 million people did not work for pay but had been seeking a job, 5 million people did not work for pay and had not been seeking a job for the past several months, and 45 mil..
What is the growth rate of its real gdp : Suppose an economy's real GDP is $42,000 in year 1 and $43,200 in year 2. What is the growth rate of its real GDP? Instructions: Round your answer to two decimal places. The growth rate of the economy's real GDP =_____%

Reviews

Write a Review

Microeconomics Questions & Answers

  What is the price received by producers

find the equilibrium price and quantity of cigarette packs and what is the price received by producers? The price paid by the consumers? The new market quantity?

  What if an audience member had been injured by tiger

What claims can she make? What defenses does the casino have - What if an audience member had been injured by the tiger? How would that change the case against the casino?

  The significant run-up in oil prices from 2005-2010 was an

the significant run-up in oil prices from 2005-2010 was an example of a. an aggregate demand shock that increased the

  Explain the understanding of externalities by providing the

describe your understanding of externalities by providing an example of a positive externality and a negative

  What is chris''s marginal rate of substitution

Add an indifference curve to your graph and label the point of consumer equilibrium. Indicate Chris's consumption level of A and B. Explain why this is a consumer equilibrium. What can you say about Chris's total utility at this equilibrium?

  What would you say to these stakeholders

What would you say to these stakeholders? Formulate your advice, drawing on course readings, other scholarly sources, and the concept of healthcare price elasticity.

  What effect does immigration have on wages write down some

in your quest to understand how your employees would be affected by any of the decisions you are going to make you also

  Welfare assistance has become temporary

According to the textbook, Bill Clinton re-defined welfare by creating the Temporary Assistance for Needy Families (TANF) program. TANF's key feature was its temporary nature. Conclude whether or not welfare assistance has become temporary. Provide e..

  What is marys before-tax cost of capital

Mary has borrowed $125,000 at 8% from her parents. She is asking Kevin for $75,000 to start her own business. Kevin requires that the business make a 12% rate of return. What is Mary's before-tax cost of capital?

  What myths has the work of his foundation debunked

1. Bill Gates argue that world poverty as we know it can be ended by 2020. What myths has the work of his foundation debunked and can what he has learned work here at home?

  Illustrate the demand and supply graph

The market price of a basic digital cell phone fell due to increased production.Demand for office space in major US cities dropped significantly between 2009 and 2010.

  What happens to demand because of the fcc passing

Explain the graphs theoretically what happens about banning the price discrimination, like what happens to demand because of the fcc passing.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd