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Summary: 9/30/2010
1
17. backward induction
ultimatums and bargaining
take it or leave it offers.
Two players. Split a dollar. (s,1s) offer to 2.
if accepts get (s,1s). Otherwise zero for both.
Does backward induction permit (.99, .01),
(100,0)
IN splitting the dollar
· Why do we see a failure of backwards
i d ti ? ( thi h i ti )induction? (see this happen in practice)
pride thing
want to be fair
9/30/2010
2
Two period game. "Shrinking pie" time
of making the decision enters in
Dollar on the table.
Make an offerMake an offer
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