Consider the Rubinstein bargaining model discussed in class. Suppose now

that the two players bargain over $10 and that if no agreement is reached by

the end of the game, player 1 receives $2 and player 2 receives $1.

(a) Find the subgame perfect Nash equilibrium outcome in the nite horizon

model in which the game ends after period 3.

(b) Find the subgame perfect Nash equilibrium outcome in the infinite hori-

zon model.