Question
onsider the following Bargaining game, where each player tries to maximize his own number of coins. Player A starts the game with 3 coins and
onsider the following Bargaining game, where each player tries to maximize his own number of coins.
Player A starts the game with 3 coins and Player B starts with 1 coin.Player A needs to decide how many coins to give to Player B. Player A moves first, and makes an offer to Player B. Player B observes the offer, and then chooses to accept or reject the offer.
If player B rejects the offer, the game is over: Player A loses all his 3 coins and player B losses his 1 coin (both players end up with zero coins).
If Player B accepts the offer, the game is over: Player B keeps his original 1 coin plus the coin(s) offered by Player A, while Player A keeps the coin(s) he did not offer to player B.
In the subgame perfect equilibrium of this game:
Player A offers zero coins to Player B
Player A offers one coin to Player B
Player A offers two coins to Player B
Player A offers three coins to Player B
Player A plays a mixed strategy
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