Question

Jabon is given $50 to do with as he sees fit. He can decide how much to give to Alisa. Alisa can accept Jabon's money offer, or she can reject it. If she accepts it they both keep those amounts, but if she rejects it neither gets to keep any money. This situation is an example of the ________.

Answer 1

The given situation is an example of ultimatum game.

Step-by-step explanation:

The ultimatum game is a popular experiment. It is widely used in economic experiments. In this game two people are matched randomly, one player as a proposer and one as a responder. They are told they would play a game exactly once. The proposer is given an amount of money and he has the task to split or divide that amount between himself and the responder. When the proposer conveys the decision, the respondent then decides whether to accept or reject it. If the responder accepts, then both earn the amount split per the proposer's suggestion. If responder rejects then both the proposer and responder receive nothing.

For example a player is given a sum of money, $ 20. He is called proposer. He is told to offer some endowed amount (from $1 to $20) to the other player who is responder. If responder accepts this amount offer they both keep that money but if the responder rejects the offer then both players get nothing.