midterm2 2008 solutions

# She has also received a wage oer r from yahoo but we

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Unformatted text preview: an inﬁnitesmall amount. This will result in a payoﬀ that is approximately:p∗ (1 − p∗ ) p*(1­p*),p*(1­p*)/2, p*(1­p*)/2,...,p*(1­p*)/2,1/8, 1/8,... n ∗ ∗ (1 n+1 ⇒ p∗ (1 − p∗ ) + p (1−p )δδ) −δ ) + 8δ −δ) 2(1− (1 S∗ our second condition is: o n ∗ ∗ (1 n+1 p (1−p∗ )(1−δ n ) δn + 8(1−δ) > p∗ (1 − p∗ ) + p (1−p )δδ) −δ ) + 8δ −δ) 2(1−δ ) 2(1− (1 4 The players in the following game are Alice, who is an MIT senior looking for a job, and Google. She has also received a wage oﬀer r from Yahoo, but we do not consider Yahoo as a player. Alice and Google are negotiating. They use alternating oﬀer bargaining, Alice oﬀering at even dates t = 0, 2, 4, . . . and Google oﬀering at odd dates t = 1, 3, . . .. When Alice makes an oﬀer w , Google either accepts the oﬀer, by hiring Alice at wage w and ending the bargaining, or rejects the oﬀer and the negotiation continues. When Google makes an oﬀer w , Alice • either accepts the oﬀer...
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## This document was uploaded on 03/21/2014 for the course ECON 14.12 at MIT.

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