Answered
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.
On May 07, 2024