PLEASE CHECK THIS HOW TO SOLVE Amir and Beatrice play the following game. Amir offers an amount of money z € [0, 1] toBeatrice. Beatrice can either accept or reject. If Beatrice accepts, then Amir receives 1 - zdollars and Beatrice receives a dollars. If Beatrice rejects, then both receive no money. As inthe Ultimatum Game, Amir cares only about maximizing the amount of money he receives.Beatrice, on the other hand, detests Amir, and therefore cares about the amount of moneythat both receive: if Amir receives y dollars and Beatrice receives a dollars, then Beatrice'spayoff is a-ay where a > 0.(a) Find all pure strategy Nash equilibria of the game in which the two players choosesimultaneously (thus Beatrice accepts or rejects without seeing Amir's offer).Solution: The NE are the strategy profiles in which Beatrice rejects and Amir's offer asatisfies 2-a(1-x) ≤0, i.e. r ≤a/(1+a).(b) Find all subgame perfect equilibria of the sequential game in which Amir first makes theoffer and Beatrice observes the offer before choosing whether to accept or reject.Solution: There is a unique SPE given by Amir offering r* = a/(1+ a), and Beatriceaccepting any offer x ≥a/(1+a) and rejecting any lower offer.

Provided data Let's look There are 2 player Beatrice and Amir Let's take Amir—-A B- Beatrice X…

Answered: Amir and Beatrice play the following…

Amir and Beatrice play the following game. Amir offers an amount of money z € [0, 1] to Beatrice. Beatrice can either accept or reject. If Beatrice accepts, then Amir receives 1 - z

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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