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Consider a game with two players, A and B. Player A has preferences defined over monetary payoffs to herself (2 A) and those to player
Consider a game with two players, A and B. Player A has preferences defined over monetary payoffs to herself (2 A) and those to player B (XB). Her preferences can be represented as: 1A - P(ZA-IB) if x A > IB UA(2A, 2B) = 24-01B - 1A) if XA CIB 2A if ra = IB -- Suppose the game is a generalized dictator game with a price of giving p in which player A proposes a division of $10 for the two players. Player A decides to give rb to Player B, thus she gets 2A = 10 - p.rb. (a) Suppose Player A would like both players to have equal payoffs. For a given p, what is the value of XA = B? (b) Suppose p= 5 and o = 1? If the price is p= 0.5 will Player A choose 18 = 0? (C) Suppose p= 1 and o = 1? If the price is p = 2 will Player A choose 13 = 0? (d) Suppose p= f and o = 1? Find two prices p for which Player A will choose 2A = IB? (e) Now, think about the ultimatum game, where Player 1 proposes a split of an amount of money, and Player 2 can accept or reject the proposal. Suppose Player 2 has preference parameters p = and o= . In an ultimatum game, would Player 2 accept or reject an offer of $2? Consider a game with two players, A and B. Player A has preferences defined over monetary payoffs to herself (2 A) and those to player B (XB). Her preferences can be represented as: 1A - P(ZA-IB) if x A > IB UA(2A, 2B) = 24-01B - 1A) if XA CIB 2A if ra = IB -- Suppose the game is a generalized dictator game with a price of giving p in which player A proposes a division of $10 for the two players. Player A decides to give rb to Player B, thus she gets 2A = 10 - p.rb. (a) Suppose Player A would like both players to have equal payoffs. For a given p, what is the value of XA = B? (b) Suppose p= 5 and o = 1? If the price is p= 0.5 will Player A choose 18 = 0? (C) Suppose p= 1 and o = 1? If the price is p = 2 will Player A choose 13 = 0? (d) Suppose p= f and o = 1? Find two prices p for which Player A will choose 2A = IB? (e) Now, think about the ultimatum game, where Player 1 proposes a split of an amount of money, and Player 2 can accept or reject the proposal. Suppose Player 2 has preference parameters p = and o= . In an ultimatum game, would Player 2 accept or reject an offer of $2
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