Consider the accompanying decision tree and information to answer the questions that follow.
The decision tree depicts two players (Jane and Aaron) playing an ultimatum game where Aaron is given $1,000 and asked to propose a way of splitting it with Jane. When Jane learns Aaron's proposal, Jane chooses whether to accept or reject the split. If Jane accepts the split, both players receive the money according to Aaron's split proposal. If Jane rejects the split, both players receive nothing. This game will be played only once, so Aaron does not have to worry about reciprocity when making his choice.
There are four sets of payoffs at the terminal nodes of the decision tree. In each node, the dollar amount to the left of the comma represents Aaron's payoff, and the dollar amount to the right of the comma represents Jane's payoff.

-If Aaron could be 100% certain that Jane was rational,did not care about fairness,and always made decisions to maximize her payoff regardless of the situation in which she might find herself,Aaron would likely offer a(n)________ proposal and ultimately receive a payoff of ________.
A) unfair; $500
B) unfair; $999
C) unfair; $0
D) fair; $500
E) fair; $0

Question

Consider the accompanying decision tree and information to answer the questions that follow.
The decision tree depicts two players (Jane and Aaron) playing an ultimatum game where Aaron is given $1,000 and asked to propose a way of splitting it with Jane. When Jane learns Aaron's proposal, Jane chooses whether to accept or reject the split. If Jane accepts the split, both players receive the money according to Aaron's split proposal. If Jane rejects the split, both players receive nothing. This game will be played only once, so Aaron does not have to worry about reciprocity when making his choice.
There are four sets of payoffs at the terminal nodes of the decision tree. In each node, the dollar amount to the left of the comma represents Aaron's payoff, and the dollar amount to the right of the comma represents Jane's payoff.
 
-If Aaron could be 100% certain that Jane was rational,did not care about fairness,and always made decisions to maximize her payoff regardless of the situation in which she might find herself,Aaron would likely offer a(n)________ proposal and ultimately receive a payoff of ________.
A) unfair; $500 
B) unfair; $999 
C) unfair; $0 
D) fair; $500 
E) fair; $0

Quizplus · Accepted Answer

If Jane is rational and only cares about maximizing her payoff, Aaron can offer an unfair proposal where Jane gets a small amount, and he keeps most of it. Jane will accept any amount greater than $0, so Aaron can offer $1 to Jane and keep $999 for himself.

Consider the Accompanying Decision Tree and Information to Answer the Questions