What should the first player offer the second

Reference no: EM131309336

Consider the Dictator Game, a two-player game often played in experimental economics labs. In the Dictator game, one player (the Dictator) is given an amount of money and then instructed to give some arbitrary portion of it to an anonymous second player. The second player must accept whatever the first player offers, if anything.

a. According to traditional economic theory, what should the first player offer the second?

b. In experimental settings, the average offer given to the second player is about 30% of the initial amount. Explain how such an offer might not be motivated by an innate sense of fairness.

Reference no: EM131309336

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