The utility from the cooperation game is added to the maximin utility from the competition game (where beach/beach is played), for 100 Bob utility and 150 Alice utility.
I’ve reread this part and still don’t understand why beach/beach is played in the competition game. How was that determined?
It is because beach/beach is the surplus-maximizing result. Any Pareto-optimal bargaining solution where money is involved will involve the surplus-maximizing result being played, and a side payment occuring.
I’ve reread this part and still don’t understand why beach/beach is played in the competition game. How was that determined?
It is because beach/beach is the surplus-maximizing result. Any Pareto-optimal bargaining solution where money is involved will involve the surplus-maximizing result being played, and a side payment occuring.