Principles of Microeconomics (MindTap Course List)
8th Edition
ISBN: 9781305971493
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 22, Problem 6CQQ
To determine
The ultimatum game and if people care on fairness.
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In the following 3-player game, the payoffs represent the number of years in jail. The equilibrium is ________
Group of answer choices
Eric and Ned denies.
Eric and Tim confess, but Ned denies.
Eric confesses, Ned and Tim deny.
Eric and Time deny, but Ned confesses
Economics
Consider the ultimatum and dictator games.
a) Briefly explain the general experimental findings
about how individuals play these games. How do
they compare with the game theoretic
predictions?
b) How do social preferences explain behavior in
these experiments?
c) Real world experiences have an impact on
experimental behavior. Explain how real world
experiences could affect behavior in each of
theses experiments.
d) Suppose that you would like to increase the
amount that is sent in these experiments. Can you
think of a way to to this?
e) Suppose that individuals play first a dictator
game and then an ultimatum game with the roles
reversed, i.e. the sender in the dictator game is the
receiver in the ultimatum game. Given what you
know about individuals' behavior, how do
think that players will play? Explain.
you
If you take a maximin strategy
A.
you are ensuring that the other player gets the worst possible outcome.
B.
you are irrational according to economic definition.
C.
then both players are doing the best they can given the payoffs in the game.
D.
you are getting the best possible outcome given that the other player does the thing that's worst for you.
Chapter 22 Solutions
Principles of Microeconomics (MindTap Course List)
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Similar questions
- 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?.arrow_forwardMULTIPLE CHOICE (identify the one best answer below and explain your reasoning for each option): If James is the leader in the game then: (hint: you can draw the game tree to see it better)a. There are two equilibrium outcomes that coincide with the Nash equilibria.b. The unique equilibrium outcome is James playing Rooster and Buzz playing Chicken.c. The equilibrium outcome is the same as if Buzz were the leader.d. All of the above.e. None of the abovearrow_forwardOur classroom needs a better webcam. A webcam benefits everyone and I am soliciting donations from the class. There are N students, and each student possesses a token. A webcam costs K tokens. K is greater than 2, but less than N. Now, the action of each student is to either donate a token or avoid me. Find the Nash equilibrium/equilibria. Give an answer with reasoning.arrow_forward
- Q2. The Prisoners' Dilemma: Jill Confess Remain Silent Confess Bob: 8 years Jill: 8 years Bob: Free Jill: 20 years Bob Remain Silent Bob: 20 years Jill: Free Bob: 1 year Jill: 1 year 2A: Find Nash equilibrium? 28. Is the Nash equilibrium best outcome for them? 2C. If your answer of Q2 is 'No', then why they choose an outcome which is not best for them.arrow_forwardWhich of the following is NOT one of the four steps for making good strategic decisions? A. Assume that others will defer to your action. B. Think about the “what ifs” separately. C. Play your best response. D. Consider all the possible outcomes.arrow_forwardYou have just played rock, paper, scissors with your friend. You chose scissors and he chose paper, so you won. Is this a Nash equilibrium? Explain why or why not.arrow_forward
- Roger and Rafael play a game with the following rules. Roger is given $250 to divide between himself and Rafael. Rafael does not get to choose but he can reject Roger’s offer if he does not like it. If Rafael rejects, both get nothing. If Rafael accepts, both get the split that Roger decided. a. What is this game called? b. Find all Nash equilibria for this game. c. When this game is played in the real world, do the predictions in part 1b materialize? Why/why not? d. Are all Nash equilibria in part 1b Pareto Optimal? Explainarrow_forwardThe outcome of a prisoners' dilemma game with a Nash equilibrium is that Question 20 options: both players confess. both players deny. there is no equilibrium. one player denies and one player confesses.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
- Sam and Sarah are thinking about getting married. However if either of them cheats on the other, they would get a payoff of 10, while the other person gets zero. If neither cheat, they stay with each other and get a payoff of 7 each and if both cheat, the relationship falls apart and each get a payoff of 1. What is the Nash equilibrium of this game? a. Cheat, Cheat b. Not cheat, Not cheat Sam cheats, Sarah doesn't Sarah cheats, Sam doesn'tarrow_forwardSay that you are bidding in a sealed-bid auction and that you really want the item being auctioned. Winning it would be worth $500 to you. Say you expect the next-highest bidder to bid $300.a. In a standard “highest-bid” auction, what bid would a rational person make? The rational choice is to bid $500 since that is what the item is worth to you. The rational choice is to bid a little bit more than $300 because that is the expected next-highest bid. The rational choice is to bid just under $500 so that you have a higher chance of winning the auction and would still have a net benefit. The rational choice is to bid over $500 to guarantee that you win the item. b. In a Vickrey auction, what bid would he make? The rational choice is to bid slightly more than $500. The rational choice is to bid $500. The rational choice is to bid slightly less than $500. The rational choice is to bid slightly more than $300.arrow_forwardGame theory is designed to study situations in which each agent's decisions are: A)interdependent. B)independent. C)constrained. D)uninformed.arrow_forward
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