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5) Consider two people playing an ultimatum game over $10 that can be divided in $1increments ($10-$0, $9-$1, $8-$2, etc.). Suppose it is common knowledge among them that both have Fehr-Schmidt utility functions with the assumptions given in lecture.

a) What is the subgame perfect Nash equilibrium if it is common knowledge that both players have a= 1.5 and = 0.6? Show your work/logic
b) What is the subgame perfect Nash equilibrium if it is common knowledge that both players have a= 0.3 and= Show your work/logic

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M91251787

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