Suppose that Betty wants to purchase Spikes car. Betty is prepared to pay a maximum of $2,000.
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Suppose that Betty wants to purchase Spike’s car. Betty is prepared to pay a maximum of $2,000. Spike will not accept any amount less than $1,000.
a. Suppose that the interest rates used to determine Betty’s and Spike’s degree of impatience is iB = iS = 0.10. If there are an infinite number of bargaining rounds, what portion of the bargaining surplus will Betty and Spike receive?
b. How much should Betty offer Spike?
c. Suppose that Spike’s interest rate is iB = 0.10, but Betty’s interest rate is iB = 0.20, what portion of the bargaining surplus will Betty and Spike receive?
d. At these interest rates, how much should Betty offer Spike?
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Related Book For 
Managerial Economics: Tools For Analyzing Business Strategy
ISBN: 307174
1st Edition
Authors: Thomas J Webster
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