Principles of Economics (MindTap Course List)
8th Edition
ISBN: 9781305585126
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 22, Problem 6QR
To determine
The ultimatum game.
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Students have asked these similar questions
Two players play the Ultimatum Game, in which they are to split $20. A purely rational agent would only reject an offer of …
Group of answer choices...
-$20
-$19
-$1
-$0
-$10
Two players play the Ultimatum Game, in which they are to split $20. A purely rational agent would only reject an offer of …
Economics
CHOOSE THE CORRECT ANSWER.
Remember that in the equilibrium prediction of an
ultimatum game, the Proposer will offer the
smallest non-zero amount of money possible.
First-year Commerce students were asked to play an Ultimatum game where a choice had to be made over the division of R100. Offers could only be
made in R10 increments, and the results of the various offers made are reported in the table below.
Amount offered by Proposer
RO
R10
R20
R30
R40
R50
Proportion rejected
100%
60%
50%
30%
10%
0%
What is the equilibrium split of the R100 between the Proposer and the Responder?
O A. Proposer: R50, Responder: R50
O B. Proposer: R10, Responder: R90
O C. Proposer: R90, Responder: R10
O D. Proposer: R60, Responder: R40
O E. Proposer: R40, Responder: R60
Chapter 22 Solutions
Principles of Economics (MindTap Course List)
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Similar questions
- Why might the multiple-play ultimatum game have a different result than the single-play ultimatum game? In the multiple-play ultimatum game, the first player generally offers less money to the second player than in the single-play ultimatum game. The multiple-play ultimatum game leads to a simpler equilibrium: the first player offers exactly half of the total sum to the second player. The multiple-play ultimatum game allows for players to send signals. Therefore, the receiver can punish a player who doesn’t share enough. The multiple-play ultimatum game generally results in less cooperation because both players fall into a back-and-forth pattern of trying to punish the other player.arrow_forwardDo you believe in the principles of behavioral economics as the new way to guide economic thought and theory or are the fundamentals of traditional economics(eg. Efficient Markets Hypothesis) a necessary baseline which enables us to then understand deviations from rationality? Why? Give two examples of both real-life irrationality (behavioral economics) and rationality (traditional economics).arrow_forwardWhy might prospect theory-like behavior be rational? Why do many behavioral economists argue that such behavior irrational?arrow_forward
- What do we learn about human behavior by looking at the outcomes of the Dictator Game and the Ultimatum Game? First, describe each game; then describe what the rational result should be according to Neoclassical theory; and finally describe results we see often in real life (and discuss if they differ from what Neoclassical theory/rationality would predict).arrow_forwardGive each option explanation tooarrow_forwardWhy is option B correct?arrow_forward
- How can an anticipated change affect a market players decision?arrow_forwardIn a standard economic model, we generally assume the individual only cares about their own payoff. So, for example, utility of individual i is given by u = pi, where pi is the individual’s payoff. Suppose the individual is playing a dictator game with another partner j. How would you modify the utility function to explain the non-zero allocations to the partner that are typically observed?arrow_forwardPeer pressure is an important influence on the behavior of youngsters. For instance, many preteens begin smoking because their friends pressure them into being “cool” by smoking. Using utility theory, how would you explain peer pressure? How would this compare with the explanations provided by behavioral economics and neuroeconomics?arrow_forward
- Why do economic agents always respond to incentivesarrow_forwardSuppose that the economy is characterized by the following behavioral equations: C = 150 + 0.6Yp | = 120 G = 150 T= 100 Equilibrium output () = 900 . (Round your response to the nearest integer.) Total demand (Z) =- (Round your response to the nearest integer.)arrow_forwardWhich of the following about emotional influence on decision making is true? People generally make rational decisions that maximize desirable outcomes in the absence of emotions Only emotions that are relevant to the decision at hand have any influence on that decision People tend to overestimate their predicted negative emotions resulting from a decision's outcomes People are equally angry about unfair offers in the ultimatum game from computers and from other human playersarrow_forward
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