Laney Is Participating in an Experiment

question 114

Multiple Choice

Laney is participating in an experiment. The experimenter gives her some money and tells her she can keep it or send any part of it to someone else. If she decides to send money to someone else, the experimenter will triple the amount. Of course, there is no guarantee that she will get anything back. Laney is participating in an experiment that is known as the ____.

• A)prisoner's dilemma game
• B)trust game
• C)bystander dilemma
• D)forgiveness game

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Definitions:

Legal Reserves

Legal reserves are funds that financial institutions are required to hold in reserve against deposits made by their customers, as dictated by regulatory authorities.

Vault Cash

Physical money that is held in banks' vaults and ATMs, used to meet the bank's obligations to depositors.

Federal Reserve Bank

One of the 12 regional banks that, together with the Board of Governors, make up the Federal Reserve System, which serves as the central banking system of the United States.

Treasury Notes

Short- to medium-term debt obligations issued by a national government with fixed interest rates and maturities ranging from one to ten years.