Two players are playing a game Player 1 is given $100 and is asked to offer a certain share of the money to Player 2 Player 2 can then choose to accept or
Two players are playing a game. Player 1 is given $100 and is asked to offer a certain share of the money to Player 2. Player 2 can then choose to accept or reject the offer. If he accepts the offer, the money will be split between the two players in the ratio as decided by Player 1. If he rejects the offer, none of the players will get anything.
a)Assume that both players prefer more money to less. How would Player 1 choose his optimal strategy in this case?
b)If Player 2 prefers fairness to money, how will his decision change?
16) Your friend has just received a new book he ordered and you want to borrow it. Your friend values reading the book at $10 while you are willing to pay a maximum amount of $15 for reading it.
a)What is the equilibrium outcome in this case?
b)Will the outcome be any different if you own a book which your friend wants to read? Assume that the value that each of you place on this book is the same as that you placed on the previous book.