Predicting Behavior in Economic Games
An anthropologist is planning to conduct a study in a small, isolated fishing village where social cohesion and mutual support are considered essential for the community's success. The study will use a one-shot bargaining game where one villager (the 'Proposer') is given 10 fish and must offer a certain number to another villager (the 'Responder'). If the Responder accepts the offer, they both keep their share of the fish. If the Responder rejects the offer, both villagers get nothing.
A previous experiment comparing US students and Kenyan farmers found that while both groups readily accepted a 50% split, the farmers were far more likely to reject offers below 30% than the students were. Given this precedent, what is the most likely outcome you would predict for the Responders in the fishing village when faced with a low offer (e.g., 2 fish out of 10), and what is the economic principle that justifies your prediction?
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CORE Econ
Introduction to Microeconomics Course
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In an economic experiment, a 'Proposer' offers a split of a sum of money to a 'Responder'. If the Responder accepts, they both get the money as proposed; if the Responder rejects, both get nothing. When comparing US students and Kenyan farmers as Responders, researchers found that while a 50% offer was accepted by nearly everyone, farmers were far more likely than students to reject offers of 30% or less. Which of the following statements best analyzes the behavior of the Kenyan farmers?
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Consider a bargaining scenario where a 'Proposer' offers a split of a sum of money, and a 'Responder' can either accept the deal or reject it, in which case neither person gets anything. In a study comparing two distinct cultural groups, Group A (Kenyan farmers) was far more likely to reject low offers (e.g., 20% of the total sum) than Group B (US students). Based on this outcome, one can definitively conclude that individuals in Group A are less motivated by personal monetary gain than individuals in Group B.
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In a bargaining scenario, a 'Proposer' offers to split a sum of money with a 'Responder'. The Responder can accept the offer, or reject it, in which case neither person receives anything. An experiment found that while almost all participants from both groups accepted a 50% offer, Kenyan farmers were much more likely to reject a low offer (e.g., 20%) than US students. A critic of the study argues, 'This result simply shows that the farmers are irrational because any rational person would accept any amount of money rather than get nothing.' Which of the following provides the strongest counter-argument to this critic's claim?
In a one-shot bargaining game, a 'Proposer' offers a split of a sum of money, and a 'Responder' can accept or reject it. If rejected, neither party gets anything. An experiment compared two culturally distinct groups of Responders, 'Group A' and 'Group B'. Match each behavioral pattern observed in the experiment to its most likely underlying driver.
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Figure 4.17: Responder Acceptance Rates in the Kenyan/US Ultimatum Game