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Consider the following modification of the ultimatum game with jealousy preference. There are two players i = 1,2 bargain over how to split 1.
Consider the following modification of the ultimatum game with jealousy preference. There are two players i = 1,2 bargain over how to split 1. Player 1 offers ($1,1-81), 81 [0, 1]. Then, player 2 either accepts, a, or rejects, r. A " Jealousy" preference is captured by a, 3 [0,1]: and u (8, a) = as + (1 a)(s - (18)) = as + (1 -a) (2s - 1) u2 (81, a) = 3(18) + (1 - 3)(1 - 81 - 81) = 3(18) + (1 - 3)(1-281) As before, rejection yields zero payoff to both players. (1) Describe a pure strategy for each player. (2) Suppose a = Band solve this game by backward induction. (3) Again, solve the game by backward induction for a general a and 3
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