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economics question 4. Fred's utility function is u(1) = I (where I represents income). Suppose Fred's discount rate is 8 = 0.95. If Fred considers

economics question

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4. Fred's utility function is u(1) = I (where I represents income). Suppose Fred's discount rate is 8 = 0.95. If Fred considers $773.78 today the same as $1000 five years from now, are his preferences consistent with exponential discounting, hyperbolic discounting, or neither? Briefly explain. 5. Suppose you and a complete stranger must split $100 in even dollar increments. You propose a split (you must propose at least $1), and the stranger with whom you are splitting the $100 either accepts or rejects. If she rejects, you both receive nothing. a. What is the Nash equilibrium for this game? b. The Nash equilibrium solution is not frequently observed in practice. Explain why

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