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Consider the Following Decision Tree and Information When Answering the Following

question 37

Multiple Choice

Consider the following decision tree and information when answering the following questions:
The decision tree depicts two players (Jane and Aaron) playing an ultimatum game where Aaron is given $1,000 and asked to propose a way of splitting it with Jane.When Jane learns Aaron's proposal,Jane chooses whether to accept or reject the split.If Jane accepts the split,both players receive the money according to Aaron's split proposal.If Jane rejects the split,both players receive nothing.This game will be played only once,so Aaron does not have to worry about reciprocity when making his choice.
There are four sets of payoffs at the terminal nodes of the decision tree.In each node,the dollar amount to the left of the comma represents Aaron's payoff,and the dollar amount to the right of the comma represents Jane's payoff.

-If Aaron could be 100 percent certain that Jane was rational,did not care about fairness,and always made decisions to maximize her payoff regardless of the situation she might find herself in,Aaron would likely offer a(n) ________ proposal and ultimately receive a payoff of ________.

Definitions:

Binder

A temporary insurance contract that provides coverage until a formal, permanent policy is issued.

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Insurance services provided by a company that is reliable and deserving of trust, emphasizing fair practices and clear policies.

Initial Premium

The first payment made by the insured to the insurer to initiate an insurance policy coverage.

Life Insurance

A contract between an insurer and a policyholder, where the insurer promises to pay a designated beneficiary a sum of money upon the death of the insured person.