Evaluating the Predictive Power of the Self-Interest Model
Critique the ability of a purely self-interested actor model to predict human behavior in strategic bargaining situations. In your answer, you must use the typical experimental results of the one-shot ultimatum game to support your argument, explaining how social preferences can account for the observed deviations from the model's predictions.
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Economics
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Introduction to Microeconomics Course
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CORE Econ
Ch.4 Strategic interactions and social dilemmas - The Economy 2.0 Microeconomics @ CORE Econ
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
Evaluation in Bloom's Taxonomy
Cognitive Psychology
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Pricing Strategy in a Competitive Agricultural Market
In a one-time, anonymous interaction, Player A is given $100 and must propose a split with Player B. Player B can either accept the split, in which case they both get the proposed amounts, or reject it, in which case both players get $0. A model assuming players are purely self-interested predicts Player A will offer the smallest possible amount (e.g., $1) and Player B will accept it. However, experiments consistently show different results. Which of the following findings best explains the discrepancy between the prediction and the observed reality?
Analyzing Decision-Making in a Bargaining Experiment
Evaluating the Predictive Power of the Self-Interest Model
In a one-shot ultimatum game, a theoretical model assuming purely self-interested actors makes different predictions than what is typically observed in real-world experiments. Match each player's role and context (theoretical vs. observed) with the corresponding decision-making behavior.
The frequent rejection of offers below 20% of the total sum in one-shot, anonymous bargaining experiments provides strong evidence for the economic model that assumes individuals are purely self-interested and seek to maximize their own material payoff.
Interpreting Experimental Bargaining Results
In numerous one-shot, anonymous bargaining experiments, a significant number of participants who are offered a small portion of a total sum (e.g., 20% or less) choose to reject the offer, resulting in both participants receiving nothing. What is the most significant implication of this consistent experimental finding for economic theory?
Interpreting Experimental Bargaining Data
In a one-shot, anonymous bargaining experiment, a Proposer is given $20 to split. The Proposer offers $2 to the Responder. The Responder rejects the offer, resulting in both players receiving $0. Which fundamental assumption of a purely self-interested economic model is most directly contradicted by the Responder's action?
Analyzing Decision-Making in a Bargaining Experiment