Experiments Show That When Real People Play the Ultimatum Game

question 164

Multiple Choice

Experiments show that when real people play the ultimatum game, starting with $100,

• A) Player A usually proposes giving Player B more than $50.
• B) Player B usually accepts Player A's proposal if Player A proposes giving Player B $30 or $40.
• C) players show themselves to be rational wealth-maximizers.
• D) Both B and C are correct.

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Definitions:

Foreign Exchange

The exchange of one currency for another or the conversion of one currency into another currency.

Buy And Sell Price

The prices at which a market maker or trader is willing to purchase (buy price) and sell (sell price) a security or commodity.

Big Mac Index

A tool developed by the Economist magazine that demonstrates the over- or undervaluation of a currency as compared to the U.S. dollar using the price of the McDonald’s Big Mac.

Exchange Rate

The rate at which one currency can be exchanged for another, affecting international trade and finance.