A1 Suppose that the proposer in the ultimatum game may not propose fractional amounts,and therefore must propose $0, $1, $2, .. or $10 (see figure below). As always, theresponder must Accept (A) or Reject (R).XX$0%3D$1$2$3$4$5$6$7$9$10$8R.($6,$4)($0,$0)(a) Suppose, first, that this game is played by two egoists, for whom u(x,y)%3Dx. What isthe Nash equilibrium?(b) Suppose, second, that this game is played by two altruists, for whomu(x, y) = 2/3x+ 1/3Vy. Find the new Nash Equilibrium.

A behavioral economics trading game that is played over multiple trials is called the ultimatum…

Suppose that the proposer in the ultimatum game may not propose fractional amounts, and therefore must propose $0, $1, $2, or $10 (see figure below). As always, the responder must Accept (A) or Reject (R). 11 $0 $1 $2 $3 A $4 ($6,$4) ***** 1 $5 R ($0,$0) $6 $7 $8 $9 $10 (a) Suppose, first, that this game is played by two egoists, for whom u(x,y)=x. What is the Nash equilibrium? (b) Suppose, second, that this game is played by two altruists, for whom u(x, y) = 2/3√x + 1/3√y. Find the new Nash Equilibrium.

Suppose that the proposer in the ultimatum game may not propose fractional amounts, and therefore must propose $0, $1, $2, or $10 (see figure below). As always, the responder must Accept (A) or Reject (R). 11 $0 $1 $2 $3 A $4 ($6,$4) ***** 1 $5 R ($0,$0) $6 $7 $8 $9 $10 (a) Suppose, first, that this game is played by two egoists, for whom u(x,y)=x. What is the Nash equilibrium? (b) Suppose, second, that this game is played by two altruists, for whom u(x, y) = 2/3√x + 1/3√y. Find the new Nash Equilibrium.

ENGR.ECONOMIC ANALYSIS

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Chapter1: Making Economics Decisions

Section: Chapter Questions

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Question

Suppose that the proposer in the ultimatum game may not propose fractional amounts,
and therefore must propose $0, $1, $2, .. or $10 (see figure below). As always, the
responder must Accept (A) or Reject (R).
XX
$0
%3D
$1
$2
$3
$4
$5
$6
$7
$9
$10
$8
R.
($6,$4)
($0,$0)
(a) Suppose, first, that this game is played by two egoists, for whom u(x,y)%3Dx. What is
the Nash equilibrium?
(b) Suppose, second, that this game is played by two altruists, for whom
u(x, y) = 2/3x+ 1/3Vy. Find the new Nash Equilibrium.

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