EBK PRINCIPLES OF MICROECONOMICS (SECON
2nd Edition
ISBN: 9780393616149
Author: Mateer
Publisher: W.W.NORTON+CO. (CC)
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Chapter 17, Problem 4QR
To determine
Ultimatum games and the economic theory
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In economics, we assume that choices are based on desired outcomes. This concept is
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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.”
When 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.
Chapter 17 Solutions
EBK PRINCIPLES OF MICROECONOMICS (SECON
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- A tradeoff is illustrated by?arrow_forwardHow is willingness to pay determined by opportunity cost?arrow_forwardPeer 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_forward
- What type of economists believe that markets naturally self-correct, and will reward good strategies and punish bad ones?arrow_forwardWhat would behavioral economics say about each of the following statements? a. “Nobody is truly charitable-people donate money just 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_forwardwhat are some keypoints about behavioral economics?arrow_forward
- What 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_forwardWhy do economic agents always respond to incentivesarrow_forwardWe 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_forward
- social preferences are not really preferences, and unselfish behavior is really motivated by the desire to follow rules and conventions with respect to what is fair. Is this interpretation correct?arrow_forwardJoab and his friends used to play a game where they put on a dog's electric fence collar and tried to stand over the electric fence line because, after careful consideration of the costs and benefits, they decided that the benefits of watching their friends get shocked outweighed the costs of being shocked themselves. According to the economic way of thinking, by playing this game, Joab and his friends were O not responding to the incentives they faced. making an irrational choice. making a rational choice. not fully considering the costs and benefits of their decision since this is obviously a mistake for anybody to do.arrow_forwardThe law of diminishing marginal utility is consistent with the fact that people trade. Do you agree or disagree? Explain your answer.arrow_forward
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