Bundle: Principles of Economics, Loose-leaf Version, 8th + LMS Integrated MindTap Economics, 2 terms (12 months) Printed Access Card
8th Edition
ISBN: 9781337607735
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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Economics
Consider the ultimatum and dictator games.
a) Briefly explain the general experimental findings
about how individuals play these games. How do
they compare with the game theoretic
predictions?
b) How do social preferences explain behavior in
these experiments?
c) Real world experiences have an impact on
experimental behavior. Explain how real world
experiences could affect behavior in each of
theses experiments.
d) Suppose that you would like to increase the
amount that is sent in these experiments. Can you
think of a way to to this?
e) Suppose that individuals play first a dictator
game and then an ultimatum game with the roles
reversed, i.e. the sender in the dictator game is the
receiver in the ultimatum game. Given what you
know about individuals' behavior, how do
think that players will play? Explain.
you
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.
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
Bundle: Principles of Economics, Loose-leaf Version, 8th + LMS Integrated MindTap Economics, 2 terms (12 months) Printed Access Card
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Similar questions
- Which 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_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_forwardWhat do you think of the ethics of using unconscious nudges to alter people’s behavior?arrow_forward
- The idea that standard economic model is a good predictor of behavior if people have sufficient time to learn is the __________preference hypothesis.arrow_forwardEconomic agents for example consumers or firms often do things Economic agents (for example, consumers or firms) often do things that at first glance seem to be inconsistent with their self-interest. People tip at restaurants and when they are on vacation even if they have no intention to return to the same place. Firms, sometimes, install costly pollution abatement equipment voluntarily. How can these deviations from Nash predictions be explained? Economic agents for example consumers or firms often do thingsarrow_forwardRational choice theory is an economic principle that assumes individuals always make prudent and logical decisions to maximize net benefit. True or falsearrow_forward
- What would behavioral economics say about each of the following statements? a. “Nobody is truly charitable-people donate money just to show off." b. “America has a ruthless capitalist system. Considerations of fairness are totally ignored." c. “Selfish people always get ahead. It's like nobody even notices!"arrow_forwardIndicate whether the statement is true or false, and justify your answer.The endowment effect leads to a stronger status quo bias, because trades are more likely to occur.arrow_forwardA market economy seems to be able to satisfy customers who have different tastes in cars. Whether you want a big car, small car, red car or blue car, as long as you are willing to pay for it, you can find the car you desire. But with protective services (police), the market doesn’t seem to work as well. If you want lots of police attention, or little police protection, whether you want them to carry guns or not, whether you want them to prevent drug sales or not, none of us seem to be able to get the exact protection services that we are willing to pay for. Using economic reasoning, can you explain why the market can provide for many different tastes in cars, but not for many different tastes in protective servicesarrow_forward
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