Pearson eText Microeconomics -- Access Card
2nd Edition
ISBN: 9780136849513
Author: Acemoglu, Daron, Laibson, David, List, John
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 18, Problem 8Q
To determine
Difference in allocations depending on when the allocator remains anonymous in a dictator game.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Aanchal and Bradyn are two homo economicus engaged in exchange over sour snakes (x) and peanut butter cups (y). Their utility functions are given by the following: Aanchal: u A = x ^1/4 A y ^3/4 A Bradyn: uB = x^1/4B y ^3/4 B Aanchal has an initial endowment of 5 peanut butter cups and 13 sour worms. Bradyn has an initial endowment of 10 peanut butter cups and 7 sour worms.
g. What is Bradyn’s marginal rate of substitution of peanut butter cups (yB) for sour snakes (xB)?
Suppose the Economics Department has a graduation party for its students but as a final test they must show they have learned something about trade. Students in group A are given food (F) when they walk in, and students in group B are given a drink (D).
Refer to Scenario 1. Suppose they have very different preferences where food and drink provide utility. For group A, U = FαDβ. For group B, U = min{F,D}. The contract curve in the Edgeworth box using a representative from each group would be
(a) a right angle connecting the lower left corner with the upper right corner.(b) a curve (not necessarily a line) connecting the lower left corner with the upper right corner.
(c) a line connecting the lower left corner with the upper right corner.(d) a right angle connecting the upper left corner with the lower right corner.
Nicolaus I Bernoulli offers his friend Pierre Rémond de Montmort a game where they
need to repeatedly toss a fair ducat until they get a head for the first time. The game
stops then, and they count the number n of coin tosses it took to get the desired
outcome, and Montmort gets 2^n ducats. Assume that Montmort's utility function is
u(w)=w^0.14. How much should Montmort pay to play this game?
Chapter 18 Solutions
Pearson eText Microeconomics -- Access Card
Knowledge Booster
Similar questions
- We learned that we can use choice between a gamble over someone's best and worst outcomes and getting an outcome of interest (like getting pizza) for certain as a way to assign numeric values to utility (on a scale of 0 to 1). Using this method, if you are indifferent between the following: A gamble that has a 0.3 chance of your best possible outcome (and no lower chance), and a 0.7 chance of your worst possible outcome. Getting pizza for certain. it means that your utility for getting pizza is:arrow_forwardOwen and Simon both like playing with balls and cars. Suppose B represents the number of balls, and C represents the number of cars. If Owen's utility function can be given by U(B, C) = 10B + 5C, and Simon's utility function can be given by U(B, C) = 6B + 6C, which of the following trades would be mutually beneficial? Ⓒa. Owen gives Simon 2 balls in exchange for 3 cars b. Owen gives Simon 2 cars in exchange for 3 balls ⒸC. Owen gives Simon 3 cars in exchange for 2 balls Ⓒd. Owen gives Simon 3 balls in exchange for 2 carsarrow_forwardBack in 2007, William Beeny, the 81-year-old founder of a quirky roadside museum devoted to proving that Elvis Presley is still alive, put the museum's entire collection of Elvis memorabilia up for auction. The collection included photographs, books, yellowed news clippings, and replicas of Elvis' Cadillac. His wish was that the winning bidder would buy the collection and carry on his theory that the King never died. Beeny refused to put a value on his collection. "Value is in the eye of the beholder," he said. "One man's trash is another man's treasure." Suppose four individuals decided to participate in the auction and that their private values of the collection are as follows: Bidder Valuation Dimmy $147,000 Virginia $158,000 Burt $153,000 Hope $150,000 Which of the following statements is correct? O In a first-price sealed-bid auction, Virginia would win the collection but might end up paying more than $158,000 (winner's curse). O In an English Auction, Virginia would win the…arrow_forward
- Rosa received a corgi pillow as a raffle prize; she would have been willing to pay $18 to buy it herself. Based on the endowment effect, we would expect Rosa to be willing to sell the pillow.arrow_forwardBanks do not take steps to increase security since they believe it is less costly to allow some bank robberies than to install expensive security monitoring equipment. Explain how this demonstrates that economic agents respond to incentives.arrow_forwardTom and Jerry are room mates. They spend a total of 80 hours a week together in their room. Tom likes loud music, even when he sleeps. His utility function is UT(CT, M) = CT + M, where CT is the number of cookies he eats per week and M is the number of hours of loud music per week that is played while he is in their room. Jerry hates all kinds of music. His utility function is M² 12 UJ = CJ Every week, Tom and Jerry each get 12 chocolate chip cookies sent from home. They have no other source of cookies. We can describe this situation with a box that looks like an Edgeworth box. The box has cookies on the horizontal axis and hours of music on the vertical axis. Let the bottom-left corner be the origin for Tom, and the bottom-right corner be the origin for Jerry. Suppose the dorm's policy is "rock-n-roll is good for the soul." Thus, M=80 in the initial endowment. Consider a trade between Tom and Jerry: Jerry gives Tom one cookie for reducing one hour of music. Then the change in Jerry's…arrow_forward
- As we learned in the video, Sheldon is trying to decide between purchasing an XBox and purchasing a PlayStation. Each system has its pros and cons. Sheldon is willing to pay up to $300 for the XBox, which costs $249. He is willing to pay up to $500 for the PlayStation, which costs $499. Regardless of which game system he buys, Sheldon plans to purchase a third-party warranty for $20. Let's calculate Sheldon's opportunity cost of purchasing each system. V 3rd attempt Part 1 What is Sheldon's opportunity cost if he buys the XBox? $ Part 2 What is Sheldon's opportunity cost if he buys the PlayStation? $ See Hint See Hintarrow_forwardWhen two individuals enter an exchange, you can be sure that one person benefits and that the other person loses. Do you agree or disagree with this statement? Explain your answer.arrow_forwardEvaluate 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.”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_forwardTwo players play the Ultimatum Game, in which they are to split $20. A purely rational agent would only reject an offer of …arrow_forwardConsider an exchange economy with two consumers: Charlotte and Dylan, and two goods: quinoa (Q) and raspberries (R). Charlotte has an initial endowment of 83.9 units of quinoa and 99.3 raspberries. Dylan has 112.5 units of quinoa and 77.8 raspberries. Charlotte's utility function is given by Uc=Q¹/² R¹/², where Qc and Re are her consumption of Q and R, respectively. Dylan's utility function is given by Up-Q¹/³ R2/3, where Qp and Rp are his consumption of Q and R, respectively. Suppose that the market price of quinoa is po=2 and the market price of raspberries is pr=1. At these prices, how many units of Q would Dylan want to consume?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSONEngineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
- Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage LearningManagerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage LearningManagerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education