Scenario: Tom and Harry are participating in a game in which the participants are divided into groups of two. Tom and Harry have been put in the same group. In each round of the game, Tom will be given an item. Tom can either give it to Harry or pass it on to the next team. If he decides to pass it on to the next team, neither of them will get the prize. If he gives it to Harry, Harry can either pass it on to the next team or sell it himself. If he passes it on to the next team, each of them will get $100. However, if he decides to sell it, he will get an amount higher than $100 and Tom will get nothing.
-Refer to the scenario above.This is an example of ________.

Question

Quizplus · Accepted Answer

This is an example of a trust game. The best choice for Tom and Harry would be for Tom to give the item to Harry and for Harry to sell it, as this would result in the highest payout for both of them. This requires trust between the two teammates, as Tom has to trust that Harry will choose to sell it rather than passing it on to the next team. Choosing to pass the item on at any point would result in no payout for either of them.

Scenario: Tom and Harry Are Participating in a Game in Which