According to the principles of Doctor Adam Smith the convergence will be to a 50/50 split, less the discount factors for the necessary number of offers necessary to arrive at that barbainging point. The larger the discount factor, the faster to 2 parties must agree to a fair bargain.
All other variables being equal, the second person must hold out for an even split.
The logic of this sequence does not follow the economic assumptions of Doctor Adam Smith. It follows the false thieving gangster logic of Keynes.
It does not matter the nature of the offer, it could be DEATH they are haggling over. The convergence point would be toward a 50/50 split, all other factors being equal.
Wait, ofcourse this is the only possible ending to a endless game. Nether side will back off, so they agree when amounts are equal. This is just common sense. Even if the options would be: 4 to player 1 and 6 player 2(or other way around) or 3 and 3(less than agreeing on 6 and 4) the end would still be 3 and 3.
Sorry about my typos, english isnt my strength. Hope you understand what i mean.
@SaltsuMaaria I don't see how this could be an equilibrium regardless of the bargaining protocol, as both players earn more from the 6-4 or 4-6 breakdown than they do from a 3-3.
I regret that I am watching all your videos TOTALLY out of sequence and without the prerequisite videos. Nevertheless, I still get the gist of it all. After all, even if I DID watch all your videos, AND in the correct order, I could not claim I "know" it until *I* do it myself.
Problem is: whenever I sit down with paper and pencil, I get creative and want to think up my OWN models, and NOT just repeat what others have done.
amazing! the only video on rubinstein bargaining on youtube. :D
i'm learning this right now. i'm quite confused. maybe you could help?
in the game with only 2 offers, if B takes the whole pie (i.e. δ), A essentially gets nothing. if i were A, i would reject such a proposal and both of us would get payoffs of 0, since there is no difference in payoffs.
the only thing i find it queer is that there is no mention of 0 payoff if A/B rejects the last offer.. please clarify. thanks :D
In continuous bargaining space, you get to demand the limit as δ (or 1, or whatever) as the limit approaches that number. Since the line is continuous, it is in fact that number.
Sorry that came out horribly unclear. Search YouTube for "the ultimatum game continuous" and view that lecture. It will explain what I mean, and it should do so clearly. :)
after repeatedly watching the video for at least 3 times (and watching the ones on cookies and such lol) i have one final question! (or at least i think so)
using the same situation where there are two offers, when B takes the pie (δ), A's equil util is (1-δ). how so? considering that when B takes δ, A will get nothing and should not derive any util.
thanks for your prompt reply anyway, hope you aren't hunching over your com waiting for this reply! lol
assuming that δ = 0.8 (δ must be less than 1, in non-infinite cases, right?), following the util payouts above, this would imply that in the game of 2 offers, A receives a lower util than B. is that possible?
It's because A knows B will want at least δ in the second bargaining period. So in the first period, A can offer B δ, and B will accept that because of the limits rule we applied earlier. Since this is the first period, the actors are trying to divide 1. If B gets δ, then A gets the rest, which will be 1 - δ
Hope that clarifies things. If not, there's a video dedicated to explaining this concept--not sure if you watched it yet or not. Search "continuous counteroffers" (without quotes).
Did you watch the videos leading up to this one? I agree that this would be next to impossible if you jumped into it here, but I made it manageable if you eased into it by going through the playlist first.
According to the principles of Doctor Adam Smith the convergence will be to a 50/50 split, less the discount factors for the necessary number of offers necessary to arrive at that barbainging point. The larger the discount factor, the faster to 2 parties must agree to a fair bargain.
All other variables being equal, the second person must hold out for an even split.
centurion180ad 11 months ago
The logic of this sequence does not follow the economic assumptions of Doctor Adam Smith. It follows the false thieving gangster logic of Keynes.
It does not matter the nature of the offer, it could be DEATH they are haggling over. The convergence point would be toward a 50/50 split, all other factors being equal.
centurion180ad 11 months ago
What lectures come next?
skirbida 1 year ago
Wait, ofcourse this is the only possible ending to a endless game. Nether side will back off, so they agree when amounts are equal. This is just common sense. Even if the options would be: 4 to player 1 and 6 player 2(or other way around) or 3 and 3(less than agreeing on 6 and 4) the end would still be 3 and 3.
Sorry about my typos, english isnt my strength. Hope you understand what i mean.
SaltsuMaaria 1 year ago
@SaltsuMaaria I don't see how this could be an equilibrium regardless of the bargaining protocol, as both players earn more from the 6-4 or 4-6 breakdown than they do from a 3-3.
JimBobJenkins 1 year ago 2
I regret that I am watching all your videos TOTALLY out of sequence and without the prerequisite videos. Nevertheless, I still get the gist of it all. After all, even if I DID watch all your videos, AND in the correct order, I could not claim I "know" it until *I* do it myself.
Problem is: whenever I sit down with paper and pencil, I get creative and want to think up my OWN models, and NOT just repeat what others have done.
(Where's the fun in THAT? :) )
nahaymath 2 years ago
amazing! the only video on rubinstein bargaining on youtube. :D
i'm learning this right now. i'm quite confused. maybe you could help?
in the game with only 2 offers, if B takes the whole pie (i.e. δ), A essentially gets nothing. if i were A, i would reject such a proposal and both of us would get payoffs of 0, since there is no difference in payoffs.
the only thing i find it queer is that there is no mention of 0 payoff if A/B rejects the last offer.. please clarify. thanks :D
pewpewlazerr 2 years ago
In continuous bargaining space, you get to demand the limit as δ (or 1, or whatever) as the limit approaches that number. Since the line is continuous, it is in fact that number.
Sorry that came out horribly unclear. Search YouTube for "the ultimatum game continuous" and view that lecture. It will explain what I mean, and it should do so clearly. :)
JimBobJenkins 2 years ago
after repeatedly watching the video for at least 3 times (and watching the ones on cookies and such lol) i have one final question! (or at least i think so)
using the same situation where there are two offers, when B takes the pie (δ), A's equil util is (1-δ). how so? considering that when B takes δ, A will get nothing and should not derive any util.
thanks for your prompt reply anyway, hope you aren't hunching over your com waiting for this reply! lol
pewpewlazerr 2 years ago
just thought of another thing:
assuming that δ = 0.8 (δ must be less than 1, in non-infinite cases, right?), following the util payouts above, this would imply that in the game of 2 offers, A receives a lower util than B. is that possible?
i seem to be getting this totally wrong. :P
pewpewlazerr 2 years ago
Yes. this is correct. When δ is high, whoever has the final offer has the best bargaining leverage.
JimBobJenkins 2 years ago
It's because A knows B will want at least δ in the second bargaining period. So in the first period, A can offer B δ, and B will accept that because of the limits rule we applied earlier. Since this is the first period, the actors are trying to divide 1. If B gets δ, then A gets the rest, which will be 1 - δ
Hope that clarifies things. If not, there's a video dedicated to explaining this concept--not sure if you watched it yet or not. Search "continuous counteroffers" (without quotes).
JimBobJenkins 2 years ago
No text comments because I dont think anyone understands this!!
lol!! I remember doing something at school about game theory...but I don't remember it being this complicated!
MovieMad007 2 years ago
Did you watch the videos leading up to this one? I agree that this would be next to impossible if you jumped into it here, but I made it manageable if you eased into it by going through the playlist first.
JimBobJenkins 2 years ago