Robert and Neal Are Playing the Ultimatum Game, Starting with $100

question 203

Multiple Choice

Robert and Neal are playing the ultimatum game, starting with $100. Based on the coin toss, Robert is the player to propose a division of the $100. If Robert acts as economic theory assumes and Neal acts as experimental evidence shows, Neal will

• A)accept Robert's proposal of keeping $99 and offering Neal $1.
• B)accept Robert's proposal of keeping $60 and offering Neal $40.
• C)reject Robert's proposal of keeping $99 and offering Neal $1.
• D)reject Robert's proposal of keeping $60 and offering Neal $40.

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Definitions:

Expected Monetary Value

The predicted average outcome of a decision if it were to be repeated multiple times.

Payoff Table

A table showing the possible outcomes or gains for different decisions or strategies under various conditions.

Opportunity Loss Table

A tabular representation used in decision making to outline the potential losses for not choosing the best alternative.

Expected Monetary Value

A statistical technique used to calculate the average outcome when the future includes scenarios that may or may not happen.