The responder in an ultimatum game is likely to reject an offer ...

[mwit1967]

The responder in an ultimatum game is likely to reject an offer of 10 of 1 but is less likely to reject an offer of 10 of 100. What is the reason behind such inconsistent behavior?
 
  What will be an ideal response?

Question 2

Which of the following statements is true?
 
  A) Under monopoly, the seller sets the price of its good below marginal costs.
  B) Under perfect competition, sellers set the price of their goods below marginal costs.
  C) Under monopoly, prospective buyers may not be able to buy a good even if they have a willingness to pay above marginal costs.
  D) Under perfect competition, prospective buyers may not be able to buy a good even if they have a willingness to pay above marginal costs.

[lou]

Answer to Question 1

A responder in an ultimatum game rejects an offer made by the proposer if he prefers fairness to money. However, as the opportunity cost of exercising fairness increases, the responder is less likely to exercise fairness. Therefore, a responder who rejects an offer of 10 of 1 is less likely to reject an offer of 10 of 100.

Answer to Question 2

C