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

Question

Quizplus · Accepted Answer

Conventional economic theory predicts that Anthony will propose a 99-1 split because it maximizes his payoff, assuming Addie acts rationally and accepts any non-zero offer.

Anthony and Addie Are Playing the Ultimatum Game, Starting with $100