Experiments based on the "ultimatum game" indicate that people are generally:

A. not interested in utility.

B. willing to pay money (reduce their income) to enforce their own sense of fairness.

C. rational because they will take any amount offered to avoid the possibility of losing money.

D. irrational because they reject every offer.

Question

Business

Shaun Shepard

12 January, 13:14

Experiments based on the "ultimatum game" indicate that people are generally:

A. not interested in utility.

B. willing to pay money (reduce their income) to enforce their own sense of fairness.

C. rational because they will take any amount offered to avoid the possibility of losing money.

D. irrational because they reject every offer.

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Answers (1)

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Piper Castro · Answer 1

The correct answer is letter "B": willing to pay money (reduce their income) to enforce their own sense of fairness.

Explanation:

The "ultimatum game" is an economic strategy in which two individuals are gathered knowing they will see each other only once. The first individual is in charge of proposing an offer on diving an amount of money. If the second individual rejects the offer neither one of them gets anything. If the second individual accepts the offer, the first individual obtains what was demanded and the rest goes for the second individual.

Thus, the "ultimatum game" shows how someone (the second individual) could turn down a unique offer that does not meet his or her demands. This, with plain knowledge the offer another individual could provide, might be worse, thus, reducing the chances to obtain what is desired for defending his or her sense of fairness.