Question: 24.9* Everyday and Business Application: Bargaining over a Fixed Amount: Consider a repeated version of the game in exercise 24.5. In this version, we do
24.9* Everyday and Business Application: Bargaining over a Fixed Amount: Consider a repeated version of the game in exercise 24.5. In this version, we do not give all the proposal power to one person but rather imagine that the players are bargaining by making different proposals to one another until they come to an agreement. In part A of the exercise we analyze a simplified version of such a bargaining game, and in part B we use the insights from part A to think about an infinitely repeated bargaining game. (Note: Part B of the exercise, while conceptually building on part A, does not require any material from Section B of the chapter.)
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