Question 6

Chapter 12 Problem 3 Fred and Barney are negotiating with each other to divide $4. Simultaneously, each proposes an integer between 0 and 4 (inclusive) to represent the amount that Fred gets. If they propose the same number, Fred receives the proposed amount and Barney receives the rest. If they propose different numbers, neither gets anything. Does either player have a dominant, weakly dominated, or dominated strategy? Identify all the Nash equilibria. Is there an equilibrium in which Fred and Barney don't reach an agreement (that is, in which they make different proposals)? If such an equilibrium exists, is it reasonable? Why or why not