Ali and Baba are bargaining to split a total that starts out at $100. Ali makes the first offer,…

Ali and Baba are bargaining to split a total that starts
out at $100. Ali makes the first offer, stating how the $100 will be divided
between them. If Baba accepts this offer, the game is over. If Baba rejects it,
a dollar is withdrawn from the total, so it is now only $99. Then Baba gets the
second turn to make an offer of a division. The turns alternate in this way, a
dollar being removed from the total after each rejection. Ali’s BATNA is $2.25
and Baba’s BATNA is $3.50. What is the rollback-equilibrium outcome of the
game?

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