Backward induction equilibrium of the extensive game

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Rosa and Ernesto are going to split $10. They have agreed to the following rules. Rosa first divides the money into two piles, $x in one pile and $10-x in the other pile, where x=0,1,2,3,4, or 5. Ernesto observes Rosa's division and chooses which one of the two piles he will get; Rosa gets the remaining pile.

a. Model this situation as an extensive form game and draw a game tree to represent the extensive form game.

b. Use your game tree in part (a) to find all the backward induction equilibrium (or equilibria) of the extensive game.

Reference no: EM133139624

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