ECON 221 Study Guide - Midterm Guide: Subgame Perfect Equilibrium, Subgame, Root Mean Square
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Normal form representation of a game di er from this? (5 marks) 1: jason and kate are out at a restaurant. They have ordered a dessert along with two spoons. They play a game where they simultaneously choose a fraction (between 0 and 1) of the dessert to o er the other person. Let a (0 (cid:20) a (cid:20) 1) be the fraction that jason o ers to kate. Let b (0 (cid:20) b (cid:20) 1) be the fraction that kate o ers to jason. The amount of dessert that will go to each person will be (dessert to jason, dessert to. Kate) (b; a) if a + b (cid:20) 1 (0; a) if a + b > 1 and b > a (b; 0) if a + b > 1 and a > b. Jason(cid:146)s happiness/payo is measured as 10 times the share of dessert he eats.