Figure 2: Robot prices and labour compensation in manufacturing in the US (1990=100) 220 Labor costs 200 180 Source: Tilley, Jonathan, "Automation, 160 Robotics, and the Factory of the Future", 140 September 7, 2017, Mckinsey & Company. 120 100 80 60 40 Robot prices 1990 1995 2000 2005 2010 Now, consider Bruno, who owns a small manufacturing firm and produces windscreens for automobiles. Currently Bruno uses two robots and ten workers including Angela in his production.Automation, broadly referring to the adoption of machines and computers in the production process has become increasingly more popular across many sectors and countries. For example, the market for industrial robots has experienced a dramatic expansion in the last couple of decades, as shown in Figure 1. Figure 1 Annual shipments of industrial robots worldwide (thousand units) 421 381 921 Source: Modified from Exhibit 178 2, Mckinsey & Company, Industrial Robotics: Insights into 121 the Sector's Future Growth Dynamics, July 2019. Note: Forecast 2018-2021 2000 2006 2010 2015 10F 198 20F 2021F At the same time, the prices of labour and robots have been changing. The case of the US manufacturing sector in the last few decades is shown in Figure 2.Figure 3: Fraction of offers rejected in the ultimatum game, according to offer size and the number of Responders 100 Fraction of offers rejected (%) One Responder Two Responders 75 50 25 0 0 5 10 15 20 25 30 35 40 45 50 Fraction of the pie offered by the Proposer to the Responder(s) (%)