On each of two days, Alan and Daisy can jointly undertake a project that yields a profit of $150 per day. They alternately make proposals (at most one per day), starting with Daisy, about how to split this amount. If a proposal is rejected, they don't work on the project that day; if it is accepted, the agreement applies to that day and the remaining day (if any) . Suppose, first, that both Alan and Daisy have no outside option (they can earn nothing outside). They both want to maximize their own total income over the two days.

(a) Determine the outcome (how they will split the profit) of this bargaining situation, carefully explaining your logic.

(b) Now suppose that Daisy can earn $70 a day outside (but Alan still cannot earn anything outside). Determine the bargaining outcome now.

(c) Explain why the bargaining outcomes are different in parts a and b above