Scenario: the Ultimatum Game Is a Two-Player Game Played as Follows

question 101

Multiple Choice

Scenario: The ultimatum game is a two-player game played as follows. One player, the proposer, is told to divide a sum of money between the two players. The proposer proposes how to divide the sum. The other player, the responder, then chooses to either accept or reject the proposal. If the responder accepts the proposal, the money is split according to the proposal. If the responder rejects the proposal, neither receives any money. When this game is played by real people from a common social group, it is frequently observed that the proposer offers close to 50-50 split and the responder rejects offers below 30 percent of the sum.
-Refer to the scenario above.According to the theory presented in the textbook,if the proposer offered 0 percent,should the responder accept?

• A) He can either accept it or reject it, because he will end up with nothing anyway.
• B) Yes, because 0 percent is the maximum the proposer can ever offer.
• C) No, because, if the responder rejected the offer, he will get more.
• D) No, because, 0 percent is the minimum the responder can expect from the proposer.

---

Definitions:

Check Outstanding

A check that has been written and recorded in the issuing account but has not yet been cleared or cashed by the bank.

Bank Reconciliation

The process of comparing and adjusting the balance shown on a bank statement with the amount shown in a company’s records to ensure they match.

Internal Control

Procedures and policies implemented by a company to safeguard its assets, ensure accurate and reliable financial reporting, and comply with laws and regulations.

Cash

Liquid assets that a company or individual has available for transactions.