7. Consider a three-player bargaining game, where the players are negotiating over a surplus of one...

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7. Consider a three-player bargaining game, where the players are negotiating over a surplus of one unit of utility. The game begins with player 1 propos- ing a three-way split of the surplus. Then player 2 must decide whether to accept the proposal or to substitute for player 1's proposal his own alterna- tive proposal. Finally, player 3 must decide whether to accept or reject the current proposal (whether it is player 1's or player 2's). If he accepts, then the players obtain the specified shares of the surplus. If player 3 rejects, then the players each get 0. Draw the extensive form of this perfect-information game and determine the subgame perfect equilibria. 7. Consider a three-player bargaining game, where the players are negotiating over a surplus of one unit of utility. The game begins with player 1 propos- ing a three-way split of the surplus. Then player 2 must decide whether to accept the proposal or to substitute for player 1's proposal his own alterna- tive proposal. Finally, player 3 must decide whether to accept or reject the current proposal (whether it is player 1's or player 2's). If he accepts, then the players obtain the specified shares of the surplus. If player 3 rejects, then the players each get 0. Draw the extensive form of this perfect-information game and determine the subgame perfect equilibria.

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Extensive Form and Subgame Perfect Equilibria Extensive Form The extensive form of this game can be ... View the full answer