Suppose That an Economics Professor Selects Two Students, Audrey and Michael

question 161

Multiple Choice

Suppose that an economics professor selects two students, Audrey and Michael, to participate in a classroom experiment. The professor gives Audrey twenty $1 bills. Audrey must pick an allocation of the twenty $1 bills to offer to Michael. If Michael accepts the allocation, each student keeps his or her portion of the money. If Michael rejects the allocation, the professor keeps the $20, and each student receives nothing. Audrey selects $19 for herself and $1 for Michael. Based on the studies of human decision making, which of the following statements is correct?

• A)If Michael accepts the offer, he is behaving rationally.
• B)If Michael rejects the offer, he may value fairness more than $1.
• C)If Michael rejects the offer, Audrey made a bad choice by trying to keep $19 for herself.
• D)Any of the above could be correct.

---

Definitions:

Deterrence Theory

A concept in criminology that argues the certainty, severity, and swiftness of punishment can deter individuals from committing crimes.

Pre-Twentieth Century

Referring to the period in history before the year 1900.

Deterrence

The use of punishment or the threat of punishment to discourage individuals from engaging in criminal or undesirable behavior.

Punishing

The act of imposing a penalty or sanction on someone for their wrongdoing or offense.