Scenario: Catherine and Arthur Are Playing a Game

question 14

Multiple Choice

Scenario: Catherine and Arthur are playing a game. They are put in two different rooms and asked to choose between two colors: black and white. If they both choose black, they will not get any money. If they both choose white, each of them will get $5. If one chooses white while the other chooses black, the one who chooses black will get $10 and the one who chooses white will get $0.
-Refer to the scenario above.If the players have to pay a fairness penalty of $6,________.

• A) Catherine would choose white, and Arthur would choose black
• B) Catherine and Arthur would both choose white
• C) Catherine and Arthur would both choose black
• D) Catherine would choose black, and Arthur would choose white

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Definitions:

Faithful Representation

When an economic phenomenon is depicted completely, neutrally, and free from material error.

Economic Benefits

are the advantages or gains that entities expect to receive as a result of certain actions or investments, often measured in terms of cash flows or cost savings.

Qualitative Characteristics

Attributes that make the information provided in financial statements useful to users, such as relevance and faithfulness.

Faithful Representation

A qualitative characteristic of financial information that ensures the reported data accurately reflects the economic phenomena it purports to represent.