Homework Clinic
Social Science Clinic => Economics => Macroeconomics => Topic started by: lingual on Nov 23, 2022
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Efficiency and Undesirable Outcomes
You are playing the Ultimatum Game as the Proposer. You must decide how to split $45 and can only choose whole dollar amounts. You did some research and learned that Responders typically reject offers of 10 percent or less but accept offers of more than 10 percent. If your goal is to maximize your payoff, how much should you offer?
Please round your final answer to the nearest dollar.
◦ $0
◦ $5
◦ $4.5
◦ $45
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$5
If Responders typically reject offers of 10 percent or less, you want to offer more than 10 percent to increase the likelihood that your offer will be accepted.
To determine what amount to offer, first determine 10 percent of $45 = (10/100)*45 = 0.1*45 = $4.5.
You want to offer more than that and can only offer whole dollar amounts, so offer $5.