Zero Sum Games
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Thank you Walter! I've emailed a reply. [View full text and thread]
|11/16/2000 09:51 AM by Brandon; Bargaining - Smarties|
There are 2 common interpretations to the discount factor.
1) Impatience: the value of a 1 unit of consumption today is higher than that of a unit of consuption tomorrow. This is captured by a parameter R<1
2) The game may end [View full text and thread]
|11/08/2000 08:45 AM by Walter;|
Thanks for the recommendation. I'll go take a look at those pages :)
I've a question though which I was hoping to get some clarification:-
Why are the smarties discounted as time passes rather than being discounted backwards? I had [View full text and thread]
|11/07/2000 12:07 AM by Brandon; Thank you|
Take a look at the book "Thinking Strategically" by Dixit and Nalebuff, pages 44-48 and chapter 11. It is very instructive. Think of the discount factor as "the size of the pie" that remains on table (or, suppose that after a period, [View full text and thread]
|11/06/2000 09:15 AM by Walter;|
Player T & Player D are bargaining over 100 smarties. T gets to make the 1st move and suggest he keeps a number x. If D accepts, the game is over, if she does not, there is a 2nd round in which D suggest she keeps a number y and T decides whether to accept or not. If T rejects, he gets to make a final offer to keep a number z. If D rejects the offer this time, the game is over and both get zero smarties. Player T and Player D are very hungry and therefore 100 smarties in round t+1 are worth only 100*(discount factor, player T) and 100*(discount factor, player D) smarties in round t. Given that both discount factors are less than 1.
|11/03/2000 10:41 AM by Brandon Poon; Hi! Need a little help with this bargaining problem :)|
Draw the game tree. Find the equlibrium. Show that it pays to be patient.
Can anyone help me with this? I'm kind of stuck :) [Manage messages]