Sequential Bargaining Game (The Ultimatum Game)

Using backward induction to solve for SPE of a bargaining game.

[@sayandsathish2159]

Well explained video. It's funny tho how this scenario would never work in any situation anywhere. If P1 was sure he'd end up with 0, he would make sure P2 also gets 0 by rejecting the offer. So the situation is reverse and P2 should be trying to appease P1 because otherwise he'd just be indifferent and decline, resulting in lose-lose.

[@IrisFranz]

You’re right. The assumptions of “pure self interest” and “perfect information” in game theory oversimplify the real world.