Conflicting Motivations in a Bargaining Decision
In a one-time, anonymous bargaining scenario, one individual (the 'Proposer') is given $100 and must offer a portion of it to a second individual (the 'Responder'). If the Responder accepts the offer, the money is split as proposed. If the Responder rejects the offer, neither individual receives any money. The Proposer offers to keep $90 and give $10 to the Responder. Analyze the two conflicting considerations that typically influence the Responder's decision in this situation.
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Introduction to Microeconomics Course
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Ch.5 The rules of the game: Who gets what and why - The Economy 2.0 Microeconomics @ CORE Econ
The Economy 2.0 Microeconomics @ CORE Econ
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In a one-shot bargaining scenario, Person A is given $100 and must propose a split to Person B. Person B can either accept the split, in which case they both get the proposed amounts, or reject it, in which case both get $0. If Person A proposes to keep $90 and give $10 to Person B, which of the following best explains why Person B might reject the offer, based on common experimental observations?
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In a one-time, anonymous interaction, one person is given $100 and must propose a way to split it with a second person. The second person can either accept the proposed split, in which case they both receive the money as proposed, or reject it, in which case both receive nothing. If the first person proposes to keep $90 for themselves and give $10 to the second person, the most common outcome observed in real-world experiments is that the second person accepts the offer because receiving $10 is financially better than receiving nothing.
In a one-time, anonymous interaction, a Proposer is given $100 and must offer a split to a Responder. The Responder can accept, and they both get the proposed amounts, or reject, and they both get $0. Match each proposed offer from the Proposer to the most likely motivation behind the Responder's decision, based on common experimental findings.
Conflicting Motivations in a Bargaining Decision
In a one-time, anonymous interaction, one person (the Proposer) is given a sum of money and must offer a split to a second person (the Responder). The Responder can accept the split, or reject it, in which case both get nothing. An experimenter observes two separate interactions:
Interaction 1: The Proposer offers to keep 90% and give 10% to the Responder. The Responder rejects the offer. Interaction 2: The Proposer offers to keep 60% and give 40% to the Responder. The Responder accepts the offer.
Which of the following principles best explains the Responder's different decisions, even though rejecting in Interaction 1 meant forgoing a guaranteed monetary gain?
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Critique of the Rational Actor Model in a Bargaining Context