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) Consider the following strategic problem involving the allo- cation of indivisible goods. Two individuals, 1 and 2, use the following procedure to share two
) Consider the following strategic problem involving the allo- cation of indivisible goods. Two individuals, 1 and 2, use the following procedure to share two units of a desirable indivisible good. Individual 1 first proposes how many units, 0, 1 or 2, individual 2 gets. Then individ- ual 2, after seeing 1's proposal, either accepts or rejects the proposal. If 2 accepts, then 1's proposed division goes through. On the other hand, if she rejects, both individuals receive zero units. Each individual cares only about the number of units of the good she obtains with more being strictly preferred to less. Model this strategic environment as a normal form game using a matrix representation. Identify the set of pure strategy Nash equilibrium of the game
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