Question 3 (20 Points). Ahmet (Player 1) and Yekta (Player 2) have decided to dissolve a...

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Question 3 (20 Points). Ahmet (Player 1) and Yekta (Player 2) have decided to dissolve a business partnership whose assets have been valued at $220,000. The charter of the partnership prescribes that the senior partner, Ahmet, make an offer concerning the division of the assets to the junior partner, Yekta. The junior partner can Accept, in which case the proposed division is implemented, or Reject, in which case the case goes to litigation. Litigating involves a total cost of $60,000 in legal fees (fee is deducted from the assets of the company) and the typical verdict assigns 65% of the assets to the senior partner and the remaining 35% to the junior partner. Suppose, for simplicity, that there is no uncertainty about the verdict. Suppose also that there are only three possible offers that Amy can make: a 50-50 split, a 60-40 split or a 70-30 split. What offer should Amy make? Draw the decision tree and show your decision steps. (Solutions not stating winnings for both players and solutions without decision tree will not be evaluated) Question 3 (20 Points). Ahmet (Player 1) and Yekta (Player 2) have decided to dissolve a business partnership whose assets have been valued at $220,000. The charter of the partnership prescribes that the senior partner, Ahmet, make an offer concerning the division of the assets to the junior partner, Yekta. The junior partner can Accept, in which case the proposed division is implemented, or Reject, in which case the case goes to litigation. Litigating involves a total cost of $60,000 in legal fees (fee is deducted from the assets of the company) and the typical verdict assigns 65% of the assets to the senior partner and the remaining 35% to the junior partner. Suppose, for simplicity, that there is no uncertainty about the verdict. Suppose also that there are only three possible offers that Amy can make: a 50-50 split, a 60-40 split or a 70-30 split. What offer should Amy make? Draw the decision tree and show your decision steps. (Solutions not stating winnings for both players and solutions without decision tree will not be evaluated)

Answer rating: 100% (QA)

Decision Analysis for Ahmet Player 1 Problem Ahmet the senior partner needs to choose an offer to ma... View the full answer