Econ110_Section7

# Econ110_Section7 - Section VII Bargaining Daniel Egel 1 1.1...

This preview shows pages 1–2. Sign up to view the full content.

Section VII: Bargaining Daniel Egel October 19, 2008 1 Bargaining 1.1 Some Important Concepts Discounting: For the econ students in class this should be a familiar idea. This is the idea that consumption tomorrow is worse less than consumption today. We will often use δ to represent this discount where 0 < δ < 1. Speciﬁcally, \$1 tomorrow (or more generally in the next period) is only worth \$ δ today. 1. If I have a daily discount rate of δ = 0 . 8, how much is \$1 tomorrow worth today? 2. How about if I received the dollar in two days? In two weeks? Continuum of Choices in Dynamic Setting: We will now allow people to make choices over a range of possibilities. Instead of allowing people to just choose 0 or 100, they can choose any quantity between 0 and 100 (or any other number). We will also allow people to make plays such as “accept if x 10”. We’ll do an example right now to clarify. 1.2

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### Page1 / 2

Econ110_Section7 - Section VII Bargaining Daniel Egel 1 1.1...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online