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Q. First, player 1 proposes a division of a dollar: he is restricted to offer P2 something from {$0, $0.50, $1} Then, P2 either accepts or rejects. If he accepts, they split the m1y as proposed by P1. If he rejects, then P1 makes a second offer, now restricted to the set {$0.10, $0.50} P2 again accepts or rejects: if he accepts, they split the m1y as proposed by P1; if he rejects, both get $0.
(a) Draw the extensive form game tree for this example.
(b) Explain how many histories/game tree nodes are there where P2 has to move? P1?
(c) Explain how many strategies does player 1 have in the strategic form of the game? Also, give an example of a pure strategy for player 2 in the strategic form of the game.
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