30. The ultimatum game is a two-player game, played as follows: Player 1 proposes a possible division of $1 between the two play- ers (for example, they might split the $1 evenly between them). Only divisions requiring quarters (no dimes, nickels, or pennies) are allowed. Player 2 has two options: she can either accept the division and the dollar is split as proposed, or she can reject the division in which case neither player receives anything. (a) Assuming each player just wants to maximize his profit, what is Player's 2 dominant strategy? What about Player 1? (b) In practice, a large percentage of the people in Player 1's role offer a near 50-50 split. Compare this to your results in part (a). How might you explain this difference?

Advanced Engineering Mathematics
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ISBN:9780470458365
Author:Erwin Kreyszig
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30. The ultimatum game is a two-player game, played as follows:
Player 1 proposes a possible division of $1 between the two play-
ers (for example, they might split the $1 evenly between them).
Only divisions requiring quarters (no dimes, nickels, or pennies) are
allowed. Player 2 has two options: she can either accept the division
and the dollar is split as proposed, or she can reject the division in
which case neither player receives anything.
(a) Assuming each player just wants to maximize his profit, what
is Player's 2 dominant strategy? What about Player 1?
(b) In practice, a large percentage of the people in Player 1's role
offer a near 50-50 split. Compare this to your results in part
(a). How might you explain this difference?
Transcribed Image Text:30. The ultimatum game is a two-player game, played as follows: Player 1 proposes a possible division of $1 between the two play- ers (for example, they might split the $1 evenly between them). Only divisions requiring quarters (no dimes, nickels, or pennies) are allowed. Player 2 has two options: she can either accept the division and the dollar is split as proposed, or she can reject the division in which case neither player receives anything. (a) Assuming each player just wants to maximize his profit, what is Player's 2 dominant strategy? What about Player 1? (b) In practice, a large percentage of the people in Player 1's role offer a near 50-50 split. Compare this to your results in part (a). How might you explain this difference?
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