Consider the ultimatum bargaining game as introduced in the class with the following modification. If the share of player i is x, and that of player j is xj, where ji, then the payoff of player i is xi - Bxj where 3 > 0. The parameter 3 can be interpreted as a measure of envy of player i towards player j. Find the subgame perfect equilibria of this game.

Consider the ultimatum bargaining game as introduced in the class with the following modification. If the share of player i is x, and that of player j is xj, where ji, then the payoff of player i is xi - Bxj where 3 > 0. The parameter 3 can be interpreted as a measure of envy of player i towards player j. Find the subgame perfect equilibria of this game.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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