Question: 2. Ultimatum bargaining game with two players (10 points). Consider an ultimatum bargaining game with two players, Row and Column, and three possible contracts, A,

2. Ultimatum bargaining game with two players (10 points). Consider an ultimatum bargaining game with two players, Row and Column, and three possible contracts, A, B, and Z. The rules of bargaining allow Row to propose one of the three contracts, which Column must then either accept (A) or reject (R). If Column accepts Row's proposal, then Row's proposal determines the outcome. If Column rejects it, then both get 0. Row's payoffs from proposing A, B, Z, are l, 2, and 3, assuming that Colum has accepted the contract. Column's payoffs are 2, 1, -1, respectively. If Colum rejects the contract the payoffs are 0 for both. a) Write down the Normal-form representation of the game as a matrix and nd all Nash equilibria of this game (5 points). b) Find all SPNE of this game (5 points)
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
