Consider the Ultimatum Game, a two-player game often played in experimental economics labs. In the Ultimatum Game,
Question:
a. According to traditional economic theory (which assumes that individuals are self-interested utility maximizers), what should the first player offer the second?
b. What does traditional economic theory suggest the second player should be willing to accept?
c. In experimental settings, the first player often offers the anonymous second player about 50% of the initial amount. Is this result consistent with theory? Can we easily attribute this anomaly to something other than an innate sense of fairness? Explain.
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Related Book For
Microeconomics
ISBN: 9781464146978
1st Edition
Authors: Austan Goolsbee, Steven Levitt, Chad Syverson
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