GT0-Trust - Shall I take the offer Or I can just crush it...

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1 1 Trust and Ultimatum Games UGBA 143: Game Theory and Business Decisions 2 The Money Pot I HAVE A MONEY POT. FOR EVERY DOLLAR THAT I LEAVE IN IT, THERE WILL BE THREE DOLLARS THE NEXT MORNING. PAYDAY. NOW I HAVE TEN BUCKS. SO IT’S A DEAL? 3 The Game Dilbert chooses $ x (between $0 and $10) to give Wally gets $3 x in his Money Pot the next morning Wally chooses $ y (between $0 and $3 x ) to return Payoffs: – Dilbert gets $(10 – x + y ) – Wally gets $(3 x y ) You will play be assigned a role randomly There are twelve decision rounds Randomly matched in pairs Later: Fixed partners 4 The Ultimatum Game I’ll give you an ultimatum. Let’s split it my way.
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Unformatted text preview: Shall I take the offer? Or I can just crush it under my foot… 5 The Game Let’s say the donut is worth $10 Homer proposes an ultimatum: split the donut by offering x to Bart and keeping (10 – x ) Bart responds by… accepting the offer, crushing the donut, or “crushing it partially” Bart chooses some number k between 0 and 1 Payoffs: – Bart gets: k x – Homer gets: k (10 – x ) 6 The Game You will play be assigned a role randomly There are twelve decision rounds Randomly matched in pairs A slight variation: Bart must choose either accept ( k = 1) or reject ( k = 0)...
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