EF4484 Economic Strategy and Game Theory Semester A, 2008 Homework #4 Due: 9:15AM, Wednesday 11-19-08 1. (30 points) Please consider the following ultimatum bargaining game. Players negotiate over the price of a painting that a player 1 can sell to player 2. Player 1 proposes a price p to player 2. Then, after observing player 1’s offer, player 2 decides whether to accept it (yes) or reject it (no). If player 2 accepts the proposal, then player 1 obtains p and player 2 obtains 100-p . If player 2 rejects the proposal, then each player gets zero. In this example, please assume that player 2 will accept if indifferent. What is the subgame perfect Nash equilibrium? 2. Rosemary chairs the English department at a prominent high school; Jerry, a former computer specialist and now a professional actor, is interested in working at the school. These two people have to make a joint decision. First, they have to decide whether to initiate an employment relationship (that is, whether Jerry will work for the high school). Further, two aspects of
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This note was uploaded on 02/22/2009 for the course ECONOMICS 4313 taught by Professor Tsui during the Spring '09 term at HKU.