Consider B granting the easement and charging A $10. B gets $0, A gets $499,990.
Consider B granting the easement and charging A $500,000 dollars. B gets $499,990, A gets $0.
Consider B not granting the easement. A and B get $0 each.
So they are playing a reversible ultimatum game for $499,990. Either A or B may make or reject offers. Any negotiation would immediately reduce to the ultimatum game—if A and B have a common Schelling point (say at 50⁄50) then they aren’t homo economus, they are homo sapiens.
Strictly as formulated, this is not an ultimatum game, for ultimatum game specifies a particular protocol: one player proposes a price, the other has one chance of accepting or rejecting. The post assumes no such restriction, the players could for example go through 100 bargaining iterations of any nature, such as usually proposed in various bargaining protocols.
But as long as the payment itself is not iterated (ie there is still only one easement) then at any point during the bargaining both players can make more money for themselves by pushing for more money.
Nesov is right, this is just the ultimatum game.
Consider B granting the easement and charging A $10. B gets $0, A gets $499,990.
Consider B granting the easement and charging A $500,000 dollars. B gets $499,990, A gets $0.
Consider B not granting the easement. A and B get $0 each.
So they are playing a reversible ultimatum game for $499,990. Either A or B may make or reject offers. Any negotiation would immediately reduce to the ultimatum game—if A and B have a common Schelling point (say at 50⁄50) then they aren’t homo economus, they are homo sapiens.
Strictly as formulated, this is not an ultimatum game, for ultimatum game specifies a particular protocol: one player proposes a price, the other has one chance of accepting or rejecting. The post assumes no such restriction, the players could for example go through 100 bargaining iterations of any nature, such as usually proposed in various bargaining protocols.
But as long as the payment itself is not iterated (ie there is still only one easement) then at any point during the bargaining both players can make more money for themselves by pushing for more money.