Reference no: EM131251537
In experimental tests of the ultimatum bargaining game, subjects who propose the split rarely offer a tiny share of the surplus to the other party. Furthermore, sometimes subjects reject positive offers. These findings seem to contradict our standard analysis of the ultimatum game. Many scholars conclude that the payoffs specified in the basic model do not represent the actual preferences of the people who participate in the experiments.
In reality, people care about more than their own monetary rewards. For example, people also act on feelings of spite and the ideal of fairness. Suppose that in the ultimatum game, the responder's payoff is given by y + a(y - z), where y is the responder's monetary reward, z is the offerer's monetary take, and a is a positive constant. That is, the responder cares about how much money he gets and he cares about relative monetary amounts (the difference between the money he gets and the money the other player gets). Assume that the offerer's payoff is as in the basic model.
(a) Represent this game in the extensive form, writing the payoffs in terms of m, the monetary offer of the proposer, and the parameter a.
(b) Find and report the subgame perfect equilibrium. Note how equilibrium behavior depends on a.
(c) What is the equilibrium monetary split as a becomes large? Explain why this is the case.
|
Compute and describe the nash equilibria
: Compute and describe the Nash equilibria of the following static bargaining game. - Simultaneously and independently, players 1 and 2 make demands m1 and m2.
|
|
How many degrees of freedom for error will be available
: Suppose that the significant factors are A, C, AB, and AC. What other effects need to be included to obtain a hierarchical model?
|
|
How does the decision in this case impact the validity
: How does the decision in this case impact the validity of the Board and other provisions of the Sarbanes-Oxley Act?
|
|
Cumulative distribution function
: For a continuous random variable, is the probability density function, f(x), or the cumulative distribution function, F(x), more useful in calculating probabilities? Explain why you reach this conclusion.
|
|
Find and report the subgame perfect equilibrium
: Find and report the subgame perfect equilibrium. Note how equilibrium behavior depends on a. - What is the equilibrium monetary split as a becomes large? Explain why this is the case.
|
|
How many factors did this experiment investigate
: Assume that the factors in the experiment are represented by the initial letters of the alphabet (i.e., A, B, etc.), what are the design generators for the factors beyond the basic design?
|
|
Determine the unique subgame perfect equilibrium
: Determine the unique subgame perfect equilibrium and describe what offer, if any, is accepted and in which period.
|
|
Determined for a hypothesis test
: Explain how the rejection region is determined for a hypothesis test. How does it differ between one- and two-tailed tests?
|
|
What is the complete defining relation for this design
: What is the complete defining relation for this design?
|