Economists have used the ultimatum game and the dictator game in experiments designed to determine
A)whether consumers care about fairness when they make decisions.
B)whether consumers believe it is fair for producers to raise the price of a product for which there is excess demand.
C)whether consumers understand the difference between implicit costs and explicit costs.
D)whether consumers understand the rule of equal marginal utility per dollar spent.

Question

Quizplus · Accepted Answer

The ultimatum game and the dictator game are both used to determine whether individuals care about fairness when making decisions. In the ultimatum game, there are two players and a sum of money to be divided between them. The first player proposes a split, and the second player can either accept or reject the proposal. If the proposal is accepted, the money is divided accordingly. If the proposal is rejected, neither player receives any money. In the dictator game, there is again a sum of money to be divided, but only one player makes the decision on how to divide it. These games have been used by economists to study the role of fairness and social preferences in decision-making.

Economists Have Used the Ultimatum Game and the Dictator Game