Suppose that two players, Ann and Beth, are dividing $100 between themselves and that the only feasible divisions of the money are($10,$90),($20,$80),($50,$50), and ($60,$40), where the first dollar amount is how much Ann would get, and the second dollar amount is how much Beth would get. Suppose that the bargaining protocol involves the first player vetoing one of the four allocations, the second player vetoing one of the three remaining allocations, and the first player then vetoing one of the two remaining allocations. The final remaining allocation is then the final division of the $100. Each player’s payoff is simply equal to her final allocation.
(a) What is the subgame perfect Nash equilibrium if Ann goes first?
(b) What is the subgame perfect Nash equilibrium if Beth goes first?
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