ECONOMICS W/CONNECT+20 >C<
20th Edition
ISBN: 9781259714993
Author: McConnell
Publisher: MCG CUSTOM
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Chapter 8, Problem 7DQ
To determine
Impact of framing effect in fund raising.
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Suppose Ishmael and Santiago are the only two fishermen who fish in Lake Hardin. Each must choose between fishing for 20 hours per week or for 40 hours per week. If both choose to fish for 20 hours per week, then each can earn a profit of $3,000 per week. If both choose to fish for 40 hours per week, then each can earn a profit of $2,000 per week. If Santiago fishes for 40 hours per week, and Ishmael fishes for 20 hours per week, then Santiago can earn a profit of $4,000 per week, and Ishmael can earn a profit of $1,000 per week. If Ishmael fishes for 40 hours per week, and Santiago fishes for 20 hours per week, then Ishmael can earn a profit of $4,000 per week, and Santiago can earn a profit of $1,000 per week.
a. Construct the weekly payoff matrix for this situation.
Ishmael
20 Hours
40 Hours
Santiago
20 Hours
$ for Santiago$ for Ishmael
$ for Santiago$ for Ishmael
40 Hours
$ for Santiago$ for Ishmael
$ for Santiago$ for Ishmael
b. What is the equilibrium outcome…
Please see the attache question
Suppose you have $35,000 in wealth. You have the opportunity to play a game called "Big Bet/Small Bet." In this
game, you first choose whether you would like to make a big bet of $15,000 of a small bet of $5,000. You then roll a
fair die. If you roll a 4, 5, or 6, you win the game and earn $15,000 for the big bet or $5,000 for the small bet. If you
roll a 1, 2, or 3, you lose and lose $15,000 for the big bet and $5,000 for the small bet
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Are the Small Bet and Big Bet considered fair bets?
O Big Bet is fair, but Small Bet is not.
No, both are not fair.
Yes, both are fair.
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OSmall Bet is fair, but Big Bet is not.
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Chapter 8 Solutions
ECONOMICS W/CONNECT+20 >C<
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