Economic Of Negotiations

Economic of Negotiations Assignment Question 1 Ua(Xa)= Xa^α Xa+Xb=1 Ub(Xb)=Xb (da,db) = (0,0) Ub(Xb)= 1-Xa Ub(Xb)=1-Ua(Xa)^(1/α) -g´(Ua)=(Ub-db)/(Ua-da) (1/α)*Ua^(1/α-1)=(1-Ua^█(1/α@ ))/Ua (1/α)Ua^(1/α )=1-Ua^(1/α) (1/α) Ua^(1/α)+Ua^(1/α )=1 (1+α) Ua^(1/α)=α Ua=(α/(1+α))^α NBS is: Xa=(α/(1+α)) ; Xb=1-(α/(1+α)) ; Ua=(α/(1+α))^α; Ub=1- (α/(1+α)) α can be interpreted as how much somebody A values the saloon in terms of utility. If he doesnt value the bar (if he doesnt alike(p) the cake) then α is 0, and he fares 0 from the cake. If he really likes the cake, so α = 1, and he gets ½ of the cake. Question 2 The direction of i mplementing the discount factors in NBS is by giving or fetching bargaining forcefulness depending if a player is more or less patient. Its necessary to use the asymmetric NBS to turn this question.

Ua(Xa)= Xa Xa+Xb=1 Ub(Xb)=Xb ( da,db)= (0,0) Ub(Xb)=1-Ua(Xa) -g´(Ua)=γ/(1-γ) (Ub-db)/(Ua-da) 1= γ/(1-γ) (1-Ua)/Ua Ua= γ NBS is Ua= γ ; Ub=1- γ ; Xa= γ ; Xb=1- γ b) If they apply Rubenstein model then: 1-Xa= δbXb ; 1-Xb= δaXa By solving the dodge: X! ^* a=(1-δb)/(1-δaδb) ; X^* b=(1-δa)/(1-δaδb) equipoise Strategies participant A invariably plead X^* a=(1-δb)/(1-δaδb) and accepts any offer Xb≤(1-δa)/(1-δaδb) Player B always offer X^* b=(1-δa)/(1-δaδb) and accepts any offer Xa≤(1-δb)/(1-δaδb) Equilibrium payoffs...If you want to get a full essay, order it on our website: OrderEssay.net

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