Rules and Setup
- 2 players offering, 1 player accepting
- simultaneous (offers at the same time) and sequential (accepting after both offers)
Compare To
- todo gt1 5 47
- what is your opportunity cost?
- if buying a car: think about what the agent will earn during the sale
- if there is just 1 buyer - you - your bargaining power is much higher
- if there are many buyers your bargaining power is lower
Equilibria
- A and B should offer as much as possible → don’t know what other player is offering
- if offer of other player was known just 1-upping other player would be best
- C accepts higher offer, if both offers are the same → chose any
- solved again via Backwards Induction
- SPNE: (A: MC, B: MC, C: a>b: a; a<b: b, a=b: a or b)
Experiment Outcome