Anna and Ben have to split a cake. The cake consists of 6 pieces. Anna and...

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Anna and Ben have to split a cake. The cake consists of 6 pieces. Anna and Ben take turns in making offers, Anna starts. (The offers can be any real numbers.) After each rejected offer ants however take away A pieces of cake (or the rest of the cake in case less than A pieces are left). The utility from the cake is ui(k)= ki, i = {A, B}, where ki is the number of pieces of cake that i receives. Let A = 1.5. a) How will Anna and Ben agree? Determine the subgame perfect equili- brium! b) Is the negotiation solution efficient? Justify your answer in one sentence! c) Give a Nash equilibrium in which Ben receives strictly more than Anna! Why is this not subgame perfect? d) Determine all values of A, for which Ben receives at least as many pieces as Anna in the subgame perfect equilibrium! Anna and Ben have to split a cake. The cake consists of 6 pieces. Anna and Ben take turns in making offers, Anna starts. (The offers can be any real numbers.) After each rejected offer ants however take away A pieces of cake (or the rest of the cake in case less than A pieces are left). The utility from the cake is ui(k)= ki, i = {A, B}, where ki is the number of pieces of cake that i receives. Let A = 1.5. a) How will Anna and Ben agree? Determine the subgame perfect equili- brium! b) Is the negotiation solution efficient? Justify your answer in one sentence! c) Give a Nash equilibrium in which Ben receives strictly more than Anna! Why is this not subgame perfect? d) Determine all values of A, for which Ben receives at least as many pieces as Anna in the subgame perfect equilibrium!

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The question describes a bargaining problem between two parties Anna and Ben over how to split a cake with certain rules Lets analyze each part of the question a How will Anna and Ben agree Determine ... View the full answer