Suppose That an Economics Professor Selects Two Students,Byron and Regina,to

question 315

Multiple Choice

Suppose that an economics professor selects two students,Byron and Regina,to participate in a classroom experiment.The professor gives Byron ten $1 bills.Byron must pick an allocation of the ten $1 bills to offer to Regina.If Regina accepts the allocation,each student keeps his or her portion of the money.If Regina rejects the allocation,the professor keeps the $10,and each student receives nothing.Byron selects $9 for himself and $1 for Regina.Based on the studies of human decision making,which of the following statements is correct?

• A) If Regina accepts the offer, she is behaving rationally.
• B) If Regina rejects the offer, she may value fairness more than $1.
• C) If Regina rejects the offer, Byron made a bad choice by trying to keep $9 for himself.
• D) Any of the above could be correct.

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