Intermediate Microeconomics and Its Application 12th Edition by Walter Nicholson,Christopher Snyder

Exercise 24

Return to the Centipede Game (Figure). Assume now that in addition to caring about monetary payoffs, both players have a preference for fairness in that they lose 1 util for each dollar gap between the their payoffs (in absolute value).
1. Write down the extensive form for this new game.
2. Find the equilibrium. Can fairness provide another explanation of the experimental behavior in the Centipede Game cited earlier in the chapter?
Figure Centipede Game