Suppose that there is a negotiation between two players over a painting. Person 1,the seller ,has no interest in the painting. On the other hand the painting is worth $100 to the buyer. If the painting is sold at a price in between 0 and 100, both are better off. Player 1 proposes a price p to player 2. Then after observing player 1's offer, player decides whether to accept it or to reject it. If the offer is rejected both zero and the game ends.Find the unique SPNE of this game.

Suppose that there is a negotiation between two players over a painting. Person 1,the seller ,has no interest in the painting. On the other hand the painting is worth $100 to the buyer. If the painting is sold at a price in between 0 and 100, both are better off. Player 1 proposes a price p to player 2. Then after observing player 1's offer, player decides whether to accept it or to reject it. If the offer is rejected both zero and the game ends.Find the unique SPNE of this game.

Linear Algebra: A Modern Introduction

4th Edition

ISBN:9781285463247

Author:David Poole

Publisher:David Poole

Chapter2: Systems Of Linear Equations

Section2.4: Applications

Problem 26EQ

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