Question
Consider the following game between to players Anne and Bob. Anne moves first and decides whether to play a game or pass (meaning: not play
Consider the following game between to players Anne and Bob. Anne moves
first and decides whether to play a game or pass (meaning: not play a game). If she
passes, then she gets a payoff of ? = 3. Bob gets 0 in that case. If she decides to play
the game, then the following happens: Bob chooses first and makes Anne an offer ?.
The offer is a whole number between 0 and 4. Anne observes ? and decides whether to
"Accept" or "Reject." If Bob's claim is accepted, then Bob gets ? and Anne gets 4 ?. If
the claim is rejected then, each of them gets 0.
a) Write down one strategy for each player.
b) Is there a subgame perfect equilibrium in which Anne plays the game? Explain.
c) Is there a Nash equilibrium in which Anne plays the game? If yes, find it. If no,
explain why not.
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