Consider a Variant oF the uitimatum qame we Studicd inclasSin which players have Fairness considerations. The timingOF the qame is vsual. First , Player 1 propasar the split(100 -x, x)XE [0,100]. Player 2 observes split & decides whether to accept(in which case they recieve Moncy according proposed Split)or reject (in Which case they both get žero dollars).Butnow player i's utility equals to her monetary Vtility minusthe disutility From unFairneas proportion al to the diFfrenein Monetary outCOMES . That is, given a final Split (m. ,m.) letOF a hundred dollars to player 2,Whereu, (m. ,m.) = m, -B. (m, - m2)*Ui (m.,m.)= m, - P. (m, -m.)Where Pi,Pz are parametens of the game indicating haw stronglyPlayers care a bout Fairness. Noté that the case weConsidered corres pandsto B, = Bz =0Let B,=07,10(a) Which oFFes will player 2.derinitelyallept ? revect ? Describe all sequentially rational StrategiesFor player 2.(b) For cach seqventialy ratianal Strategyof player 2 you identiFied in part (a) ,tither describeWhi ch proposal Maxi mizer player 1's continuationvalve or explain Why it does not existC pescribe alI SPNE'OF+hegame.

IntroductionThe ultimatum game described human unwillingness about injustice. Fairness can be…

Consider a Variant of the ultimatum game we studied in class in which players have Fairness considerations. The timing of the game is usual. First, Player 1 proposes the split (100-X, X) OF a hundred dollars to player 2, where XE [0,100]. Player 2 observes split & decides whether to accept (in which case they recieve money according to proposed Split) or reject (in which case they both get žero dollars). But now player i's utility equals to her monetary Utility minus

Consider a Variant of the ultimatum game we studied in class in which players have Fairness considerations. The timing of the game is usual. First, Player 1 proposes the split (100-X, X) OF a hundred dollars to player 2, where XE [0,100]. Player 2 observes split & decides whether to accept (in which case they recieve money according to proposed Split) or reject (in which case they both get žero dollars). But now player i's utility equals to her monetary Utility minus

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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