Peoples' behavior in behavioral economic games like the Dictator Game generally show that Many people seem to prefer outcomes that benefit others Under conditions of anonymity, most people are completely selfish. People are not generous unless they are in situations in which their partners will be able to reciprocate. There is very little variation in peoples' responses across cultures.
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- The prisoner illustrates that rational, self-interested individuals will natuarally avoid the Nash equilibrium, because it is worse for both of them, true or false and why ?Mr. and Mrs. Ward typically vote oppositely in elections and so their votes "cancel each other out." They each gain 24 units of utility from a vote for their positions (and lose 24 units of utility from a vote against their positions). However, the bother of actually voting costs each 12 units of utility. The following matrix summarizes the strategies for both Mr. Ward and Mrs. Ward. Mr. Ward Vote Vote Mrs. Ward Mr. Ward: -12, Mrs. Ward: -12 Don't Vote Mr. Ward: -24, Mrs. Ward: 12 The Nash equilibrium for this game is for Mr. Ward to payoff of Don't Vote Mr. Ward: 12, Mrs. Ward: -24 Mr. Ward: 0, Mrs. Ward: 0 units of utility and Mrs. Ward receives a payoff of and for Mrs. Ward to units of utility. Under this outcome, Mr. Ward receives aIn 'the dictator' game, one player (the dictator) chooses how to divide a pot of $10 between herself and another player (the recipient). The recipient does not have an opportunity to reject the proposed distribution. As such, if the dictator only cares about how much money she makes, she should keep all $10 for herself and give the recipient nothing. However, when economists conduct experiments with the dictator game, they find that dictators often offer strictly positive amounts to the recipients. Are dictators behaving irrationally in these experiments? Whether you think they are or not, your response should try to provide an explanation for the behavior.
- Within a voluntary contribution game, the Nash equilibrium level of contribution is zero, but in experiments, it is often possible to sustain positive levels of contribution for a long period. How might we best explain this? A) Participants are altruistic, and so value the payoff which other participants receive, benefiting (indirectly) from making a contribution. B) Participants believe that if they make a contribution, then other participants will be more likely to make a contribution. C) Participants in experiments believe that they have to make contributions in order to receive any payoff from their participation. D) Participants have experience of working in situations in which cooperation can be sustained for mutual benefit and so have internalised a social norm of cooperationSuppose Justine and Sarah are playing the ultimatum game. Justine is the proposer, has $140 to allocate, and Sarah can accept or reject the offer. Based on repeated experiments of the ultimatum game, what combination of payouts to Justine and Sarah is most likely to occur?.The chicken game has often been used to model crises. Recall that in this game, the two players drive straight at each other. They can choose to swerve or keep going straight. If one swerves, and the other goes straight, assume that the one that swerves gets -10 utility and the one that goes straight gets 10 utility, since the one that swerves is deemed the loser. If both swerve, both get 0 utility. If both go straight, they crash and get -50 utility. Assume both players have a discount rate of 0.9 Draw the stage game of date night List all pure strategy Nash equilibria of the single stage game Consider an infinite horizon version of Chicken. Can you get an SPNE in which the both players swerve using a grim trigger type strategy? Consider the following strategies: both players swerve, as long as neither ever went straight. If one player ever plays straight, in all subsequent rounds the player that swerved goes straight and the player that went straight swerves. Can you think…
- Marie and Mike usually vote against each other’s party in the SSC elections resulting to negating or offsetting their votes. If they vote for their party of choice, each of them gains four units of utility (and lose four units of utility from a vote against their party of choice). However, it costs each of them two units of utility for the hassle of actually voting during the SSC elections. Can you explain the scenario above?Two friends are deciding where to go for dinner. There are three choices, which we label A, B, and C. Max prefers A to B to C. Sally prefers B to A to C. To decide which restaurant to go to, the friends adopt the following procedure: First, Max eliminates one of three choices. Then, Sally decides among the two remaining choices. Thus, Max has three strategies (eliminate A, eliminate B, and eliminate C). For each of those strategies, Sally has two choices (choose among the two remaining). a.Write down the extensive form (game tree) to represent this game. b.If Max acts non-strategically, and makes a decision in the first period to eliminate his least desirable choice, what will the final decision be? c.What is the subgame-perfect equilibrium of the above game? d. Does your answer in b. differ from your answer in c.? Explain why or why not. Only typed AnswerRefer to the Ultimatum Game in Figure 17.7. Recall that the payoffs are monetary payoffs. a. Suppose that players only care about monetary payoffs, with $1 = 1 util. Find the subgame– perfect equilibrium. b. Suppose that players are imperfectly altruistic. They receive 1 util for each dollar they earn but = util for each dollar the other player earns.Write down the extensive form reflecting the new payoffs. Find the subgame–perfect equilibrium. c. Suppose that players are perfectly altruistic, receiving 1 util for each dollar in the sum of their earnings. Write down the extensive form reflecting the new payoffs. Find the subgame– perfect equilibrium. d. Suppose that players are perfectly selfless, getting 1 util for each dollar the other player earns but no utility for their own earnings. Write down the extensive form reflecting the newpayoffs. Find the subgame–perfect equilibrium. Does player 1 end up choosing the outcome that player 2 prefers?…
- Suppose players A and B play a discrete ultimatum game where A proposes to split a $5 surplus and B responds by either accepting the offer or rejecting it. The offer can only be made in $1 increments. If the offer is accepted, the players' payoffs resemble the terms of the offer while if the offer is rejected, both players get zero. Also assume that players always use the strategy that all strictly positive offers are accepted, but an offer of $0 is rejected. A. What is the solution to the game in terms of player strategies and payoffs? Explain or demonstrate your answer. B. Suppose the ultimatum game is played twice if player B rejects A's initial offer. If so, then B is allowed to make a counter offer to split the $5, and if A rejects, both players get zero dollars at the end of the second round. What is the solution to this bargaining game in terms of player strategies and payoffs? Explain/demonstrate your answer. C. Suppose the ultimatum game is played twice as in (B) but now there…100 people are choosing between two beaches to go to in the Florida Keys. Beach L is big and never gets crowded, but it is not very nice; the utility from going to Beach L is u(L) = 60. Beach M is much nicer but very small, so it gets crowded; the utility from going to Beach M is u(M) = 100-NM ; NM is the number of people that %3D go to Beach M. 5) The Nash equilibrium number of people that go to Beach L is A) 20 B) 40 C) 60 D) 80 E) 100 5).What do you think of the ethics of using unconscious nudges to alter people’s behavior?