Y7

4. [Nash's demand game] Compute and describe the Nash equilibria of the fol- lowing static bargaining game. Simultaneously and independently, players 1 and 2 make demands m, and m2. These numbers are required to be between 0 and 1. If m, + m2 - 1 (compatible demands, given that the surplus to be divided equals 1), then player 1 obtains the payoff m, and player 2 obtains m2. On the other hand, if m, + m2 > 1 (incompatible demands), then both players get 0. In addition to describing the set of equilibria, offer an interpretation in terms of bargaining weights as in the standard bargaining solution.4. [Nash's demand game] Compute and describe the Nash equilibria of the fol- lowing static bargaining game. Simultaneously and independently, players 1 and 2 make demands m, and m2. These numbers are required to be between 0 and 1. If m, + m2 - 1 (compatible demands, given that the surplus to be divided equals 1), then player 1 obtains the payoff m, and player 2 obtains m2. On the other hand, if m, + m2 > 1 (incompatible demands), then both players get 0. In addition to describing the set of equilibria, offer an interpretation in terms of bargaining weights as in the standard bargaining solution