Question: Julio offers a division of the dollar which Thomas can accept or reject. If he accepts, the game ends and the dollar is split as Julio suggested. If he rejects, we wait until Tuesday when Thomas makes an offer on how to divide the dollar. If Julio accepts this offer, the game ends and the dollar is split as Thomas suggested. If he rejects, we wait until Wednesday when Julio makes an offer on how to divide the dollar. If Thomas accepts this offer, the game ends and the dollar is split as Julio suggested. If he rejects, the dollar is destroyed - no player gets anything. Suppose that if a player is indifferent between accepting and rejecting an offer - he accepts.
Note: Players do not discount the future. However, each time a player rejects an offer, they must pay 20 cent out of their own pocket.
Solve for the Subgame Perfect Nash Equilibrium by backward induction showing the offer made each day. What division of the dollar does Julio offer on Monday?