How does the Ultimatum Game work? What does experimental evidence ...

[rosent76]

How does the Ultimatum Game work? What does experimental evidence show about the outcome of the Ultimatum game?
 
  What will be an ideal response?

Question 2

Refer to Figure 2-11. What is the opportunity cost of producing 1 pound of cashews in Indonesia?
 
  A) 3/8 of a bolt of cotton B) 5/8 of a bolt of cotton
  C) 2 2/3 bolts of cotton D) 320 bolts of cotton

[macmac]

Answer to Question 1

In the Ultimatum Game, half of the players (Proposers) are given some amount of money and are paired with other players (Responders) who start with nothing. The game is a sequential game that consists of two decisions. Proposers choose how much of the money they want to offer Responders. Each Responder then decides either to accept the Proposer's offer or to reject the offer, in which case both players walk away from the experiment empty handed.
Experimental evidence suggests that very low offers are often rejected. Proposers often understand that their low offers will likely be rejected, so they rarely offer extremely low amounts. Their offer is determined in part by how much they fear a rejection (and winding up with nothing). These experimental results are inconsistent with the theoretical predictions from game theory.

Answer to Question 2

C

[rosent76]

YES! Correct, THANKS for helping me on my review

[marict]

Great answer, keep it coming