Lectures (Video)
- 1. Introduction
- 2. Putting yourselves into other people's shoes
- 3. Iterative deletion and the median-voter theorem
- 4. Best responses in soccer and business partnerships
- 5. Nash equilibrium: bad fashion and bank runs
- 6. Nash equilibrium: dating and Cournot
- 7. Nash equilibrium: shopping, standing and voting on a line
- 8. Nash equilibrium: location, segregation and randomization
- 9. Mixed strategies in theory and tennis
- 10. Mixed strategies in baseball, dating and paying your taxes
- 11. Evolutionary stability: cooperation, mutation, and equilibrium
- 12. Evolutionary stability: social convention, aggression, and cycles
- 13. Sequential games: moral hazard, incentives, and hungry lions
- 14. Backward induction: commitment, spies, and first-mover
- 15. Backward induction: chess, strategies, and credible threats
- 16. Backward induction: reputation and duels
- 17. Backward induction: ultimatums and bargaining
- 18. Imperfect information: information sets and sub-game
- 19. Subgame perfect equilibrium: matchmaking and strategic investments
- 20. Subgame perfect equilibrium: wars of attrition
- 21. Repeated games: cooperation vs. the end game
- 22. Repeated games: cheating, punishment, and outsourcing
- 23. Asymmetric information: silence, signaling and suffering education
- 24. Asymmetric information: auctions and the winner's curse
Game Theory - Lecture 17
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Lecture 17 - Backward induction: ultimatums and bargaining
We develop a simple model of bargaining, starting from an ultimatum game (one person makes the other a take it or leave it offer), and building up to alternating offer bargaining (where players can make counter-offers). On the way, we introduce discounting: a dollar tomorrow is worth less than a dollar today. We learn that, if players are equally patient, if offers can be in rapid succession, and if each side knows how much the game is worth to the other side, then the first offer is for an equal split of the pie and this offer is accepted. But this result depends on those assumptions; for example, bargaining power may depend on wealth.
Prof. Ben Polak
ECON 159 Game Theory, Fall 2007 (Yale University: Open Yale) http://oyc.yale.edu Date accessed: 2009-01-15 License: Creative Commons BY-NC-SA |
Lecture Material
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