Consider the following “divide the dollar” game. Two player P1 and P2 decides how to split a dollar between themselves. Players move sequentially. First, P1 moves. P1 can make any offer to p2 in increments of 25 cents; that is P1 can offer $0.00, $0.25, $0.50, $0.75, or $1.00. Observing P1’s offer, P2 decides whether to accept the offer or to reject it. If P2 accepts the offer, P2 keeps the offered amount and P1 keeps the rest. If P2 rejects the offer, both players get 0.
(a) Represent this game in extensive form (b) Suppose P1 and P2 move simultaneously. Represent this game in normal form