Asymmetric Patience 1: Consider a three-period sequential (alternating offer) bargaining model in which two players have to split a pie worth 1 (starting with player 1 making the offer). Now the players have different discount factors, δ1 and δ2.
a. Compute the outcome of the unique subgame-perfect equilibrium.
b. Show that when δ1 = δ2 player 1 has an advantage.
c. What conditions on δ1 and δ2 give player 2 an advantage? Why?