Consider a version of the ultimatum game in which player A makes an integer offer {1,2 …,9} to player B. If B accepts,he or she gets that amount of money and A gets to keep the remainder of $10. If B rejects,both get nothing. Which of the following is an offer that arises in a subgame-perfect equilibrium assuming players only care about monetary payoffs?

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Quizplus · Accepted Answer

In a subgame-perfect equilibrium of the ultimatum game, player A will offer the smallest possible amount that player B will accept, assuming rational behavior focused solely on monetary payoffs. Player B, knowing that receiving something is better than nothing, will accept any positive amount. Therefore, the smallest integer offer, which is $1, is the offer that arises in a subgame-perfect equilibrium, as it maximizes player A's payoff while still being acceptable to player B.

Consider a Version of the Ultimatum Game in Which Player