EBK MICROECONOMICS
2nd Edition
ISBN: 9780134524931
Author: List
Publisher: YUZU
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Chapter 18, Problem 7Q
To determine
Explanation for the inconsistency in the theoretical and experimental results of the ultimatum game.
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The primary research finding from studies of the “Ultimatum Game” is that when most people make economic decisions they … (choose one)
-optimize.
-consider the issue of fairness.
-meliorate.
-apply the availability heuristic.
Evaluate the following statement. “We shouldn’t generalize from what people do in the ultimatum game because $10 is a trivial amount of money. When larger amounts of money are on the line, people will act differently.”
Suppose Justine and Sarah are playing the ultimatum game. Justine is the proposer, has $140 to allocate, and Sarah can accept or reject the offer. Based on repeated experiments of the ultimatum game, what combination of payouts to Justine and Sarah is most likely to occur?.
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- Two players play the Ultimatum Game, in which they are to split $20. A purely rational agent would only reject an offer of …arrow_forwardWhy might the multiple-play ultimatum game have a different result than the single-play ultimatum game? In the multiple-play ultimatum game, the first player generally offers less money to the second player than in the single-play ultimatum game. The multiple-play ultimatum game leads to a simpler equilibrium: the first player offers exactly half of the total sum to the second player. The multiple-play ultimatum game allows for players to send signals. Therefore, the receiver can punish a player who doesn’t share enough. The multiple-play ultimatum game generally results in less cooperation because both players fall into a back-and-forth pattern of trying to punish the other player.arrow_forwardWhy might prospect theory-like behavior be rational? Why do many behavioral economists argue that such behavior irrational?arrow_forward
- In a standard economic model, we generally assume the individual only cares about their own payoff. So, for example, utility of individual i is given by u = pi, where pi is the individual’s payoff. Suppose the individual is playing a dictator game with another partner j. How would you modify the utility function to explain the non-zero allocations to the partner that are typically observed?arrow_forwardEvolutionary game theory provides a framework for understanding the emergence of preferences and behavior. Why are theoretical methodologies that employ the rational actor model an evolutionary stable strategy for economists?arrow_forwardWhy do economic agents always respond to incentivesarrow_forward
- Peer pressure is an important influence on the behavior of youngsters. For instance, many preteens begin smoking because their friends pressure them into being “cool” by smoking. Using utility theory, how would you explain peer pressure? How would this compare with the explanations provided by behavioral economics and neuroeconomics?arrow_forwardThe prisoner illustrates that rational, self-interested individuals will natuarally avoid the Nash equilibrium, because it is worse for both of them, true or false and why ?arrow_forwardWhat does behavioral economics have to say about each of the following statements? a. “Nobody is truly charitable—they just give money to show off.” b. “America has a ruthless capitalist system. Considerations of fairness are totally ignored.” c. “Selfish people always get ahead. It’s like nobody even notices!”arrow_forward
- Give each option explanation tooarrow_forwardWithin a voluntary contribution game, the Nash equilibrium level of contribution is zero, but in experiments, it is often possible to sustain positive levels of contribution for a long period. How might we best explain this? A) Participants are altruistic, and so value the payoff which other participants receive, benefiting (indirectly) from making a contribution. B) Participants believe that if they make a contribution, then other participants will be more likely to make a contribution. C) Participants in experiments believe that they have to make contributions in order to receive any payoff from their participation. D) Participants have experience of working in situations in which cooperation can be sustained for mutual benefit and so have internalised a social norm of cooperationarrow_forwardWhat is the goal of behavioral economics? Group of answer choices To eliminate the consumers’ state of mind from consideration in economic analysis. To shift economic theory from a mathematical base to more of a psychological study. To integrate the insights of psychology into economics to enrich our understanding of decision-making. To study consumer behavior over time rather than behavior in the moment and integrate these insights in economic analysis.arrow_forward
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