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1. In a Dictator game, the player who makes the decision is called the Dictator and the other player is called the Recipient. The Dictator

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1. In a Dictator game, the player who makes the decision is called the "Dictator" and the other player is called the "Recipient." The Dictator decides how much of an amount of money to offer to the Recipient. Consider a situation where the Dictator has $100 to split between herself and the Recipient. a. How much money would a person who is purely selfish and rational leave in the envelope and why? b. What is the typical pattern of behavior in laboratory dictator games? Now suppose the dictator's preferences are given by the utility function UD(xD. xR), where xD is the amount of money the dictator keeps and xR the amount of money given to the recipient. c. Draw the budget set for the dictator, with xD on the x-axis and xR on the y axis. d. Suppose UD(xD,xR)=min{xD,xR}. What amount of money will the Dictator offer to the Recipient? Draw an example of the dictator's indifference curve through the point that the Dictator will choose

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