Question

b) Show that this game has a unique subgame-perfect equilibrium (SPE) and find it. c) Does a player's payoff increase or decrease with his own patience? With the opponent's patience? Discuss the intuition behind your findings. d) As ₁0, player 1's SPE payoff converges to 1 - 8₂. Give a simple reason why this limit is 1 - 8₂ without actually taking a limit. (In other words, provide an intuitive explanation for this result.) a) Show that SPE payoffs are unique, and that player 1's SPE payoff is \frac{1-\delta_{2}}{1-\delta_{1} \delta_{2}} Find player 2's SPE payoff. Consider the infinite-horizon alternating-bargaining game from Section 11.3 of Tadelis, but suppose that player 1's discount factor could be different from player 2's discount \text { factor } \delta_{2} \in(0,1) \text { factor } \delta_{2} \in(0,1)

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