Remember to circle or box your final solution, or otherwise make it abundantly clear. If you're unclear about any examples or terminology, be sure to check the textbook and lecture notes. 1. Consider a modified version of the buyer-seller game discussed in class where the seller can make a second offer to the buyer if the buyer rejects the first. To simplify matters, the seller can offer either $40 or $80 when making an offer. The seller is unsure of the buyer's valuation. She believes that there is a 40% chance that the buyer's valuation is $40 (buyer type by, where L stands for low valuation) and a 60% chance that the buyer's valuation is 80 (buyer type by with high valuation). The bargainers' discount factors are = .9. This means that the seller's payoff to agreeing to p in the second round is .9p. And, for example, the high-valuation buyer's payoff to agreeing to p in round two is his discounted gain of .9(bgy p). (a) Draw the extensive form of the game in which the seller is unsure of the buyer's reservation value. Consider the following strategy profile: Buyer-type by accepts any offer p