2. In the strategic bargaining model of Rubinstein, show that if the utility of player i,...

 

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2. In the strategic bargaining model of Rubinstein, show that if the utility of player i, u, is differentiable and axioms A0-A6 hold, we have that du, (x) < u;(v; (xi, 1)), where vi(xi, 1) > 0 is the present value at period 0 of getting x, at period 1. Moreover, show that if u is concave then u(xi) < u;(vi(xi, 1)). 2. In the strategic bargaining model of Rubinstein, show that if the utility of player i, u, is differentiable and axioms A0-A6 hold, we have that du, (x) < u;(v; (xi, 1)), where vi(xi, 1) > 0 is the present value at period 0 of getting x, at period 1. Moreover, show that if u is concave then u(xi) < u;(vi(xi, 1)).

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In the strategic bargaining model of Rubinstein we consider a game where two players engage in a bar... View the full answer