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Consider the following two-player, 5-period bargaining game with the com- mon discount factor (0, 1). The players are bargaining over surplus of 1. In this
Consider the following two-player, 5-period bargaining game with the com- mon discount factor (0, 1). The players are bargaining over surplus of 1. In this game, if an offer is rejected in period 1, 2, 3, or 4, then game moves to the next period. If the offer is rejected in period 5, the game ends and both players receive 0. Player 1 makes offers in period 1, 2, 3 and player 2 makes offers in period 4 and 5. Using backward induction, find SPNE (in pure strategies) of this game. Find the equilibrium payoffs of each player
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