John and Rebecca Are Playing an Ultimatum Game Where John

question 114

Multiple Choice

John and Rebecca are playing an ultimatum game where John is given $100.00 and asked to propose a way of splitting it with Rebecca.When Rebecca learns John's proposal,she chooses whether to accept or reject the split.If Rebecca accepts the split,both players receive the money according to John's split proposal.If Rebecca rejects the split,both players receive nothing.This game will be played only once,so John does not have to worry about reciprocity when making his choice.
Suppose that John proposes a split such that John will receive $99.99 and Rebecca will receive $0.01.Traditional economic theory predicts that Rebecca will:

• A) accept the $0.01 because she values receiving $0.01 more than receiving nothing.
• B) accept the $0.01 because she wishes to punish John for proposing such an unfair split.
• C) reject the $0.01 because she wishes to punish John for proposing such an unfair split.
• D) reject the $0.01 and also would have rejected a split such that John receives $50.00 and Rebecca receives $50.00.
• E) sometimes accept the $0.01 and sometimes reject the $0.01, depending on her mood at the time.

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Definitions:

Vertical Supply Chain

A vertical supply chain integrates multiple stages of production and distribution, managed by a single company, to control supply and costs.

Manufacturer

A company or individual that produces finished goods from raw materials in large quantities through various manufacturing processes.

Wholesaler

A person or company that sells goods in large quantities at low prices, typically to retailers or other businesses.

Distribution Center

A specialized facility that stores and ships products, serving as a key node in the supply chain between manufacturers and customers.