Question
In class we solved a two-player, three-period, alternating-offer bargaining game. Extend this to four periods, and solve it. Suppose that Player 1 makes the first
In class we solved a two-player, three-period, alternating-offer bargaining game. Extend this to four periods, and solve it. Suppose that Player 1 makes the first offer and that if a player is indifferent between accepting and rejecting an offer, the player accepts the offer. Remember that the players are bargaining over the percentage each player will take of a pie so all offers are in the interval [0,1]. Both players have a discount factor of, i.e., they discount the future an equal amount. Write down the game in the extensive form and label the periods.
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