Impact of a Responder's Outside Option on Ultimatum Game Outcomes
A change in the rules that improves the Responder's next best alternative, or outside option, fundamentally alters the distribution of payoffs in the ultimatum game. For instance, if a Responder receives a guaranteed payment (e.g., 40% of the pie) for rejecting an offer, this amount becomes their new minimum acceptable offer. A strategic Proposer, anticipating this, will not propose any amount less than this outside option, as it would be rejected. This rule modification effectively increases the Responder's structural power and ensures they receive a larger share of the pie.
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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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Consider two distinct one-time bargaining situations involving a Proposer and a Responder who must agree on how to split $100.
Situation 1: The Proposer makes a take-it-or-leave-it offer. If the Responder accepts, they split the money as proposed. If the Responder rejects, both get nothing.
Situation 2: The Proposer dictates the split, and the Responder automatically receives their share with no ability to reject the offer.
How does the change in rules from Situation 1 to Situation 2 affect the relative bargaining power of the Proposer and the likely outcome?
Impact of Competition on Bargaining Outcomes
Consider three different one-time bargaining scenarios over a sum of $100. Arrange these scenarios in order from the one that gives the Proposer the MOST bargaining power to the one that gives the Proposer the LEAST bargaining power.
Analyzing the Impact of a Modified Rejection Payoff
Evaluating Rule Structures for Equitable Bargaining
In a strategic interaction where one person (the Proposer) offers to split a sum of money with another person (the Responder), match each modification to the rules with its most likely effect on the balance of bargaining power.
True or False: Consider a one-time bargaining situation where a Proposer offers a split of $100 to a Responder. If the rule is changed from 'a rejection means both players get $0' to 'a rejection means the Responder gets $10 and the Proposer gets $0', this change in rules decreases the Responder's bargaining power.
In a one-time bargaining interaction, a Proposer offers to split $100 with a single Responder. If the Responder rejects the offer, both individuals receive nothing. If the rules are changed so that the Proposer makes an offer to two Responders simultaneously, and the split is finalized with the first Responder to accept, the introduction of this competition is expected to cause the average offer amount accepted by a Responder to ________.
Analyzing the Impact of an Outside Option on Bargaining Power
A research institute is studying how different rule structures affect negotiation outcomes. They set up four different scenarios for a Proposer to split a $100 prize with a Responder. In which of the following scenarios does the Proposer have the most structural power, making a highly unequal split (e.g., the Proposer keeping almost everything) the most probable outcome?
How Game Rules Shape Bargaining Power in the Ultimatum Game
Impact of a Responder's Outside Option on Ultimatum Game Outcomes
Learn After
Strategic Offers with an Outside Option
In a one-shot bargaining game, a Proposer is given $100 to split with a Responder. The Proposer makes a single take-it-or-leave-it offer. The rules are then changed: if the Responder rejects the offer, the Proposer gets $0, but the Responder receives a guaranteed payment of $30. Assuming both players are rational and want to maximize their own payoff, what is the lowest offer the Proposer should make to ensure the Responder accepts?
Analyzing the Shift in Bargaining Power
In a one-shot bargaining game, a Proposer is given $100 to divide with a Responder. Initially, if the Responder rejects the Proposer's offer, both players receive $0. The rules are then changed so that if the Responder rejects the offer, they receive a guaranteed payment of $25, while the Proposer still receives $0. Assuming both players are rational and seek to maximize their own payoff, how does this rule change logically alter the Proposer's strategy?
In a one-shot bargaining game, a Proposer is given $100 to divide with a Responder. Initially, if the Responder rejects the Proposer's offer, both players receive $0. The rules are then changed so that if the Responder rejects the offer, they receive a guaranteed payment of $25, while the Proposer still receives $0. Assuming both players are rational and seek to maximize their own payoff, how does this rule change logically alter the Proposer's strategy?
Consider a one-shot bargaining game where a Proposer offers a split of $100. If a new rule is introduced that gives the Responder a guaranteed $30 payment for rejecting an offer, a rational Proposer's best strategy is to offer an amount less than $30 to counteract the Responder's increased bargaining power.
Two separate one-shot bargaining games are conducted, each with a total of $100 to be divided. In Game 1, if the Responder rejects the Proposer's offer, both players receive $0. In Game 2, if the Responder rejects the offer, they receive a guaranteed payment of $40, while the Proposer receives $0. Assuming all players are rational and seek only to maximize their own monetary payoff, which statement best analyzes the difference between the two games?
In a one-shot bargaining game with $100, a Proposer makes a take-it-or-leave-it offer to a Responder. The outcome if the offer is rejected varies across four different scenarios. Assuming all players are rational and want to maximize their own payoff, in which scenario does the Proposer have the most bargaining power (i.e., can claim the largest possible share for themselves that the Responder will accept)?
Evaluating a Policy Change in a Bargaining Scenario
In a one-shot bargaining game, a Proposer is given $100 to divide with a Responder. The rules regarding the outcome of a rejected offer are different in four separate scenarios. Match each scenario with the lowest offer the Responder would rationally accept, assuming they seek only to maximize their own monetary payoff and offers must be in whole dollar amounts.