Scenario: Robert and Alice are participating in a reality show on television. Robert is offered $500 and is told that he can keep the money as long as he shares some of it with Alice. Robert can offer Alice as much or as little as he likes, but if Alice rejects his offer, neither of them will get to keep any money.
-Refer to the scenario above.Robert should use ________ to play this game.

Question

Quizplus · Accepted Answer

Backward induction is the most appropriate technique to use in this scenario. Robert's ultimate goal is to maximize the amount of money he can keep. He needs to start by thinking about what Alice is likely to do. If she is rational, she will not accept a small amount, and this means that Robert should offer her a fair share to maximize the likelihood of her accepting the offer. By thinking backward from Alice's perspective, Robert can make the best decision for himself. Therefore, using the technique of backward induction, Robert can make the best choice in this game.

Scenario: Robert and Alice Are Participating in a Reality Show