A and B are bargaining over a business opportunity that is worth $50,000. A has an outside option that will give her $10,000 if she does not reach an agreement with B, while B’s outside option is $24,000. Bargaining proceeds as in the ultimatum game. First A proposes a division, then B accepts or rejects. If B accepts, the division is implemented. If B rejects, each player obtains their outside option. Assume that if a player is indifferent between a proposed dividsion and his or her outside option, then the player accepts the division. Using backward induction, the prediction is that1. A proposes $50,000 for her and $0 for B.2. A proposes $10,000 for her and $40,000 for B.3. B rejects every proposal and takes his outside option.4. None of the above.