Question

You play the following bargaining game. Player A moves first and makes Player B an offer for the division of ​$10001000. ​ (For example, Player A could suggest that she take ​$600600 and Player B take ​$400400​.) Player B can accept or reject the offer. If he rejects​ it, the amount of money available drops to ​$800800​, and he then makes an offer for the division of this amount. If Player A rejects this​ offer, the amount of money drops to ​$500500 and Player A makes an offer for its division. If Player B rejects this​ offer, the amount of money drops to​ $0 and player A keeps the ​$500500. Both players are​ rational, fully​ informed, and want to maximize their payoffs.Which player will do best in this​ game? Assume that monetary divisions must take the form of dollars​ (rather than cents or smaller​ denominations) and, in each​ round, a player will offer at least​ $1.

The player that will do best in this game is Player A because when following his optimal strategy he should receive a payoff of​$ ___. ​(Enter a numeric response using an​ integer.)

Answer 1

Player A will do best in this​ game.

Step-by-step explanation:

The player that will do best in this game is Player A because when following his optimal strategy he should receive a payoff of​ $500