Brian and Andrea are playing the ultimatum game,starting with $100.The coin flip results in Brian being the one to propose a division of the $100.Brian proposes that he gets $99 and Andrea gets $1.
A) Because the 99-1 split isn't fair,Brian should not make this offer.
B) Conventional economic theory predicts that Brian will propose a 99-1 split,just as he did.
C) Experimental evidence suggests that Andrea will accept the 99-1 split because,even though it isn't fair,it's better than nothing.
D) Economic theory predicts that Brian should choose a 60-40 split to maximize his payoff.

Question

Quizplus · Accepted Answer

Conventional economic theory, specifically the rational choice theory, predicts that Brian will propose a 99-1 split because it maximizes his payoff, assuming Andrea will accept any non-zero amount as it is better than nothing.

Brian and Andrea Are Playing the Ultimatum Game,starting with $100