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QuestionTwo business partners have the opportunity to undertake a new project which will lead to a profit of £1000. First, though, they have to agree on how to split the profit. Consider the following (one-shot) bargaining game: the two business partners can make simultaneous demands. If the sum of their demands is no larger than £1000, then they can proceed with the project, obtain their demands and the rest is given to charity. If the sum of their demands is instead more than £1000, then the project cannot be undertaken, and they both get nothing.
What are the Nash equilibria of this game?
What are the strictly dominated strategies?
What are the weakly dominated strategies?
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