Suppose Gina and Henry play two rounds of the ultimatum game.In the first round they play for $10;in the second round they play for $1,000.In the first round Gina suggests an 80/20 split ($8 to Gina,$2 to Henry) ,but Henry quickly rejects the offer as unfair.Assuming Gina is interested in gaining financially from the experience and that she understands behavioral economics,we would expect her to:

A) offer the same relative split ($800/$200) ,knowing that Henry will accept the offer because the dollar amount he would forgo by rejecting it is substantial.
B) offer a more unequal split ($900/$100) in order to gain more for herself and figuring Henry will accept the split because $100 is better than nothing.
C) offer a more equal split ($700/$300) to increase the probability that Henry will accept the offer.
D) offer Henry more than half of the pot to ensure acceptance of the offer.

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Alexandra Vargas · Accepted Answer

Final Answer : C, Explanation :  The best choice for Gina would be to offer a more equal split in the second round ($700/$300) to increase the probability that Henry will accept the offer. This is because in the first round, Henry rejected the offer of an 80/20 split, indicating that he values fairness over monetary gain. By offering a more equal split in the second round, Gina is acknowledging Henry's preference for fairness and increasing the likelihood that he will accept the offer. Additionally, an offer of $700 to Henry is not insignificant, and offering a highly unequal split may risk Henry rejecting the offer again.

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