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.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter8: Game Theory

Section: Chapter Questions

Problem 8.1P

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