How does the Ultimatum Game work? What does experimental evidence show about the outcome of the Ultimatum game?
What will be an ideal response?
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.
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Which of the following is TRUE about monopolistic competition?
A) One firm serves as the entire industry. B) A small number of firms serve the entire market. C) It is competition among many firms producing similar but differentiated products. D) The pattern of production and trade is difficult to predict. E) It enjoys no economies of scale.
If the inflation rate is lower than expected, real income is redistributed from lenders to borrowers
a. True b. False
If crude oil is a variable factor of production for a firm, then an increase in the price of crude oil will lead to:
A. a decrease in the firm's supply. B. a decrease in the quantity supplied by the firm, but no change in the firm's supply. C. an increase in the firm's supply. D. an increase in the quantity supplied by the firm, but no change in the firm's supply.