Critique of the Rational Actor Model in a Bargaining Context
Consider a one-time, anonymous interaction where one person (the 'Proposer') is given $100 and must offer a portion of it to a second person (the 'Responder'). The Responder can either accept the offer, in which case the money is split as proposed, or reject it, in which case both individuals receive nothing. A purely self-interested, rational model of decision-making would predict that the Responder should accept any offer greater than zero. However, in experiments, offers where the Proposer keeps $90 and offers $10 are frequently rejected.
Evaluate the adequacy of the purely self-interested, rational model in explaining the observed behavior in this scenario. In your evaluation, discuss the limitations of the model and identify the non-monetary factors that likely influence the Responder's decision.
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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
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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.
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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?
Evaluating a Prediction in a Bargaining Experiment
Critique of the Rational Actor Model in a Bargaining Context