Player accepts the division

Assignment Help Business Economics

Reference no: EM13153253

A and B are bargaining over a business opportunity that is worth $50,000. A has an outside option that will give her $10,000 if she does not reach an agreement with B, while B's outside option is $24,000. Bargaining proceeds as in the ultimatum game. First A proposes a division, then B accepts or rejects. If B accepts, the division is implemented. If B rejects, each player obtains their outside option. Assume that if a player is indifferent between a proposed dividsion and his or her outside option, then the player accepts the division. Using backward induction, the prediction is that

1. A proposes $50,000 for her and $0 for B.

2. A proposes $10,000 for her and $40,000 for B.

3. B rejects every proposal and takes his outside option.

4. None of the above.

Reference no: EM13153253

Questions Cloud

What price will the firm charge : What is the profit maximizing level of output for this monopolist? What price will the firm charge? What profit will the firm earn and what are your answers to (a) if average consumer income is $30,000?

Which principle of tax equity-the benefit principle : Which principle of tax equity-the benefit principle or the ability-to-pay principle-is in closest agreement with your personal idea of what is fair? Develop a "position statement" based on your response.

Understanding of the necessary decisions : With a good understanding of the requirements document, an understanding of the necessary decisions, and a sketch of the worksheet, the next step is to ____.

Argumentative retrospective essay : I am writing a argumentative retropective essay on about my composition and i want to talk about how my writing has improved gradually. below is imy introduction

Player accepts the division : If B accepts, the division is implemented. If B rejects, each player obtains their outside option. Assume that if a player is indifferent between a proposed dividsion and his or her outside option, then the player accepts the division.

Explain several q-q plots for data simulated : The number of cases in the data. Repeat until you get an idea how much variation you should expect. But isn"t there a hypothesis test we should apply?

Demand for its fine owner selected : A winery estimates that the demand for its fine Owner's Select, has an income elasticity of 2, where income refers to the income per capita of its customer base.

Calculate the total bond interest expense : 1. Calculate the total bond interest expense over the bonds' life. 2. Prepare a straight-line amortization table for the bonds' life.

What would happen to the production possibility frontier : What would happen to the Production Possibility Frontier over time? How would invention and technological improvement modify your answer?

User Account

All Pages