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Unformatted text preview: continuing, she will
oﬀer wA at the next day, which will be accepted. The present value of this is
δ wA = π δ (1 − δ ) + δ 2 r < r ≤ w , i.e. this deviation yields even a lower payoﬀ.
— Suppose that w < wG ≡ r. Alice is supposed to reject it and take Yahoo’s
oﬀer with payoﬀ r. If she deviates accepting w , she will get the lower payoﬀ of
w < r. If she deviates by rejecting and continuing, she will get wA next day,
with a lower present value of δ wA = π δ (1 − δ ) + δ 2 r < r.
• Consider a case Google oﬀers w. If w...
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This document was uploaded on 03/21/2014 for the course ECON 14.12 at MIT.
- Fall '04
- Game Theory