24.5 Everyday Application: Splitting the Pot: Suppose two players are asked to split $100 in a way that is agreeable to both.

A. The structure for the game is as follows: Player 1 moves first, and he is asked to simply state some number between zero and 100. This number represents his “offer” to player 2; that is, the amount player 1 offers for player 2 to keep, with player 1 keeping the rest. For instance, if player 1 says “30,”

he is offering player 2 a split of the $100 that gives $70 to player 1 and $30 to player 2. After an offer has been made by player 1, player 2 simply chooses from two possible actions: either “Accept” the offer or “Reject” it. If player 2 accepts, the $100 is split in the way proposed by player 1; if player 2 rejects, neither player gets anything. (A game like this is often referred to as an ultimatum game.)