Consider the following bargaining problem. In the usual way, a uint pie

Exercise 5.4 Consider the following bargaining problem. In the usual way, a \"unit pie\" is split into non-negative amounts 1: and y with x+ y S 1. The utility function of player I is u(x) = x, the utility function of player His v(y) = 1 (1 y)2. The threat point is (0,0). (a) Draw the bargaining set (as set of possible utilities (u,v)) and indicate the Pareto- frontier in the picture. (b) Find the Nash bargaining solution. How will the pie be split, and what are the utilities of the players