Answered: Consider the following Bargaining game,…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Question

Consider the following Bargaining game, where each player tries to maximize his own number of coins.

Player A starts the game with 3 coins and Player B starts with 1 coin. Player A needs to decide how many coins to give to Player B. Player A moves first, and makes an offer to Player B. Player B observes the offer, and then chooses to accept or reject the offer.

If player B rejects the offer, the game is over: Player A loses all his 3 coins and player B losses his 1 coin (both players end up with zero coins).

If Player B accepts the offer, the game is over: Player B keeps his original 1 coin plus the coin(s) offered by Player A, while Player A keeps the coin(s) he did not offer to player B.

In the subgame perfect equilibrium of this game: Select the right option from below

		Player A offers zero coins to Player B
		Player A offers one coin to Player B
		Player A offers two coins to Player B
		Player A offers three coins to Player B
		Player A plays a mixed strategy