Compute the subgame perfect equilibrium

Assignment Help Macroeconomics

Reference no: EM13197055

Consider the alternating-offer bargaining game with three periods, in which the players discount payoffs received in successive stages according to a common discount factor d = 0.9. Player 1 makes the first offer of how to split a surplus of 1, followed by either acceptance or rejection of this offer by player 2. Acceptance ends the game, and the surplus is divided as agreed. If player 1's offer is rejected, player 2 then makes an offer in period 2 which player 1 can either accept or reject. Acceptance ends the game, and rejection leads to player 1 making a final offer in period 3 which player 2 is free to either accept or reject.

Part a Draw the relevant game tree.

Part b Compute the subgame perfect equilibrium, clearly specifying the complete contingent plan representing each player's equilibrium strategy.

Reference no: EM13197055

Questions Cloud

Write an equation in the form : It costs a $15 flat fee to rent a chain saw, plus $3 a day starting with the first day. Let x represent the number of days rented, so y represents the charge to the user (in dollars).

Why is the stackelberg equilibrium not chosen : selects its own output q2. Output is homogeneous across firms and satisfies the industry inverse demand function P = 200 - q1 - q2. Both firms have zero fixed costs and total costs of Ci(qi) = 60qi. Compute the Cournot-Nash equilibrium outputs and ..

Is there a successful democratic transition in africa : Is there a successful democratic transition in Africa? Compare and contrast two African countries where democracy has progressed and might be irreversible. You can compare one francophone country with an Anglophone country.

Calculate the subgame-perfect nash equilibrium of the game : Imagine a market setting with three firms. Firms 2 and 3 are already operating as monopolists in two different industries (they are not competitors). Firm 1 must decide whether to enter Firm 2's industry and compete with Firm 2, or enter Firm 3's ..

Compute the subgame perfect equilibrium : Player 1 makes the first offer of how to split a surplus of 1, followed by either acceptance or rejection of this offer by player 2. Acceptance ends the game, and the surplus is divided as agreed. If player 1's offer is rejected, player 2.

State the multiple regression equation : 1.)State the multiple regression equation.2)Interpret the meaning of the slopes, b1 and b2,in this problem.3) Predict the weekly fuel consumptions for the average hourly temperature is 53.10 and the chill index is 15.

How much will your firms total revenues changes : You are the manager of a firm that receives revenues of $30,000 per year from product X and $70,000 per year from product Y. The own price elasticity of demand for product X is -2.5, and the cross-price elasticity of demand between product Y and X..

Find the dimensions of the enclosure : A rectangular enclosure is made from 60 m of fencing. The area enclosed is 216 m2. Find the dimensions of the enclosure.

Find the break even point : A company has fixed costs of 20,000,and the cost of producing one unit of their product is $10. the unit sell for $20. write an equation for the total cost. write an equation for the total revenue. graph these equations to find the break even poin..

User Account

All Pages