Strategic Proposing in a Bargaining Game
In a one-time bargaining interaction, you are a 'Proposer' and must decide how to split $100 with a 'Responder'. If the Responder accepts your offer, the money is split as proposed. If they reject, you both receive $0. You are told that the Responder comes from a population where offers of 30% ($30) or less are rejected approximately 50% of the time, while offers of 40% ($40) or more are almost always accepted. Your sole objective is to maximize your own monetary payoff. What offer would you make? Justify your decision by analyzing the trade-off between making a low offer versus a high offer.
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CORE Econ
Introduction to Microeconomics Course
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Comparison of Proposer Offers: Kenyan Farmers vs. US Students
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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?
Interpreting Economic Behavior
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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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Predicting Behavior in Economic Games
Designing an Experiment to Isolate Motivations
Influence of Social Preferences on Responder Behavior in the Ultimatum Game
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Figure 4.17: Responder Acceptance Rates in the Kenyan/US Ultimatum Game