Question 4: Homer has simple altruism, but with the following non-linear form: u' (x1, x2) - In(x +1)+o (In(x2+1)

Linear Algebra: A Modern Introduction
4th Edition
ISBN:9781285463247
Author:David Poole
Publisher:David Poole
Chapter4: Eigenvalues And Eigenvectors
Section4.6: Applications And The Perron-frobenius Theorem
Problem 70EQ
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Question 4:
Homer has simple altruism, but with the following non-linear form:
u' (x1,x2) = In(x1 +1)+o (In(x2+ 1)
(a) Suppose Homer plays a dictator game in which he must divide $10 between himself and
another person. As a function of his o, how will he behave?
(b) In class, we discussed how the linear version of simple altruism does not explain well the
quantitative results in experimental dictator games. Does this non-linear version work better?
Transcribed Image Text:Question 4: Homer has simple altruism, but with the following non-linear form: u' (x1,x2) = In(x1 +1)+o (In(x2+ 1) (a) Suppose Homer plays a dictator game in which he must divide $10 between himself and another person. As a function of his o, how will he behave? (b) In class, we discussed how the linear version of simple altruism does not explain well the quantitative results in experimental dictator games. Does this non-linear version work better?
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