In the ultimatum game, two strangers are given $50 and must decide how to split the money between them. One player, called the proposer, makes the initial decision on how to split the money. The second player, called the responder, either accepts or rejects the proposer's offer. If the responder accepts the offer, both players are paid according to the proposer's offer. If the responder rejects the offer, neither player receives any money.
a. Suppose the proposer and responder act in a rationally self-interested manner. What split would the proposer offer? How would the responder reply?
b. Suppose the proposer is altruistic. How might his behavior change?

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The Answer of In the ultimatum game, two strangers are given $50 and must decide how to split the money between them. One player, called the proposer, makes the initial decision on how to split the money. The second player, called the responder, either accepts or rejects the proposer's offer. If the responder accepts the offer, both players are paid according to the proposer's offer. If the responder rejects the offer, neither player receives any money.
a. Suppose the proposer and responder act in a rationally self-interested manner. What split would the proposer offer? How would the responder reply?
b. Suppose the proposer is altruistic. How might his behavior change?

In the Ultimatum Game, Two Strangers Are Given $50 and Must