Use the Following to Answer Questions

question 218

Multiple Choice

Use the following to answer questions :
Scenario I
The scenario describes research findings discussed in the following review article:
Cameron,C.C. ,& Thaler,R.H.(1995) .Anomalies: Ultimatums,dictators,and manners.Journal of Economic Perspectives,9(19) ,209-219.
In the ultimatum game,two participants are assigned to be either the "Divider" or the "Decider" by a coin flip.The Divider is given a sum of money,such as $10,and is instructed to offer some nonzero portion of it to the Decider.If the Decider accepts,she gets to keep what was offered and the Divider keeps the rest.If the Decider rejects the deal,both players get nothing.Both players are made aware of all these rules and then the game begins.Under these conditions,Dividers usually offer a little less than $5 and Deciders usually accept this amount.If Dividers offer less,Deciders often reject and both players get nothing.A similar game is termed the dictator game.Players are randomly assigned to be either the "Allocator" or the "Receiver." The Allocator is given a sum of money and makes a decision about how much money she would like to give the Receiver,who must accept this result.Allocators in this game usually offer some money to the Receiver but typically less than they offer the Dividers in the ultimatum game.
-(Scenario I) In the ultimatum game,the decision to reject an offer has been interpreted differently.One explanation is that Deciders seek,on principle alone,to exact retribution on Dividers who offer unfair deals.Another explanation is that rejecting unfair offers is part of a strategy to help ensure more fair deals in the future.Which strategy is the BEST way to evaluate these two explanations?

• A)Determine if Deciders are more or less likely to reject an unfair deal in which the Dividers change from trial to trial.
• B)Determine if Deciders are more or less likely to reject an unfair deal in multiple-trial games when they are always the Decider versus games in which they alternate between being the Divider and the Decider.
• C)Determine if Deciders would be equally likely to reject an unfair deal in the traditional game relative to the scenario in which they were told that the Divider usually makes fair deals.
• D)Determine if Deciders in multiple-trial games are more or less likely to reject an unfair deal if the deal on the previous trial also was rejected.

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Definitions:

Average Fixed

Assuming it's intended as "Average Fixed Costs," it is the fixed costs divided by the quantity of output, representing the cost per unit that does not change with the level of production.

Average Total

Typically refers to the average total cost, which is the total cost of production divided by the number of goods produced.

Total Variable

Expenses that change in proportion to the activity of a business, such as costs of goods sold, which vary with the level of production or sales volume.

Average Variable Cost

The variable costs of production (costs that change with output level) divided by the quantity of output, indicating the average variable cost per unit.