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Two players have to divide the amount of 4 according to the following protocol: both players submit their claim in a sealed envelope by writing
Two players have to divide the amount of 4 according to the following protocol: both players submit their claim in a sealed envelope by writing down an integer from the set{0,1,2,3,4}. If the sum of both submitted claims does not exceed 4, then both players receive their claim. If the sum of claims exceeds 4 and both players claim the same amount, then both receive 2. If the sum of claims exceeds 4 and both claims differ, then the lower claim will be payed out while the other player receives what is left.
- Formulate this situation as a strategic form game (that is, specify the set of players, the set of strategies and payoffs; you can sketch a payoff matrix).
- Which strategies survive the elimination of strictly dominated strate- gies (IEDS+)?
- Which strategies survive the elimination of weakly dominated strategies (IEDS)?
- If you were playing this game, which strategy would you select and why? Give a concise answer.
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