Question: Assume that a total 100 grant will be shared by

Assume that a total $100 grant will be shared by the three researchers, X, Y, and Z. Each person is rational and selfish. There are six proposals with different shares of (X, Y, Z) for choices as the following.
Proposal I: (X, Y, Z) = (50, 40, 10)
Proposal II: (X, Y, Z) = (60, 10, 30)
Proposal III: (X, Y, Z) = (40, 20, 40)
Proposal IV: (X, Y, Z) = (20, 30, 50)
Proposal V: (X, Y, Z) = (30, 50, 20)
Proposal VI: (X, Y, Z) = (20, 50, 30)
The rule of choosing the final proposal is simple. First, Z is the person to determine who (either X or Y) is the proposal raiser. Then the proposal raiser chooses a particular proposal. Finally, the last person has the right to pass it or reject it. If the last person’s payoff is the smallest among the three, then the proposal will be rejected and no one will get anything. The decision making process can be done by only one time. Please determine which proposal will be the final outcome and explain the decision making process briefly in one paragraph.

Sale on SolutionInn
  • CreatedAugust 05, 2013
  • Files Included
Post your question