6.1 Draw a game tree that represents the ultimatum game in which the proposer is a first...

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6.1 Draw a game tree that represents the ultimatum game in which the proposer is a first mover who decides how much to offer a responder and the responder then decides to accept or reject the offer.

The total amount available is $50 if the players reach agreement, but both players get nothing if the responder rejects the offer. The proposer is allowed to make an offer of $5, $15, $25, $35, or $45. What is the subgame-perfect Nash equilibrium? What would you expect to happen in practice?

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Managerial Economics And Strategy

ISBN: 9780135640944

2nd Global Edition

Authors: Jeffrey M. Perloff, James A. Brander

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