Question
Consider alternating-offer bargaining as discussed. Xenia and Zeno are dividing a pie of size 1. They are both exponential discounters but Xenia is more impatient
Consider alternating-offer bargaining as discussed. Xenia and Zeno are dividing a pie of size 1. They are both exponential discounters but Xenia is more impatient than Zeno. Xenia's discount factor (delta) is 1/2 and Zeno's is 2/3.
a. Suppose there are three periods and Xenia can make the first and the last offer and Zeno the second offer. In a subgame-perfect equilibrium how are they going to divide the pie?
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Core Macroeconomics
Authors: Eric Chiang
3rd edition
978-1429278478, 1429278471, 978-1429278492, 1429278498, 1464191433, 978-1464191435
