Question
Consider the following game. Two players, 1 and 2, bargain to determine the split of $. Bargaining works as follows. Player 1 offers a split,
Consider the following game. Two players, 1 and 2, bargain to determine the split of $. Bargaining works as follows. Player 1 offers a split, {0, 2 ,}. Player 2 observes this offer, and either accepts it or rejects it. If 2 accepts the offer, 1 gets a payoff of , and 2 gets a payoff of - . If 2 rejects the offer, both players get 0, and the game ends. (a) Draw the extensive form of this game. (b) Determine the strategy sets for each player in this game. (c) Draw the normal form of this game. (d) Identify any strictly dominated strategies. What is left after IDSDS? (e) Identify any weakly dominated strategies.
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