Question
30. The ultimatum game is a two-player game, played as follows: Player 1 proposes a possible division of $1 between the two play- ers
30. The ultimatum game is a two-player game, played as follows: Player 1 proposes a possible division of $1 between the two play- ers (for example, they might split the $1 evenly between them). Only divisions requiring quarters (no dimes, nickels, or pennies) are allowed. Player 2 has two options: she can either accept the division and the dollar is split as proposed, or she can reject the division in which case neither player receives anything. (a) Assuming each player just wants to maximize his profit, what is Player's 2 dominant strategy? What about Player 1? (b) In practice, a large percentage of the people in Player 1's role offer a near 50-50 split. Compare this to your results in part (a). How might you explain this difference?
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Microeconomics An Intuitive Approach with Calculus
Authors: Thomas Nechyba
1st edition
538453257, 978-0538453257
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