Question

Suppose Gina and Henry play two rounds of the ultimatum game. In the first round they play for $10; in the second round they play for $1,000. In the first round Gina suggests an 80/20 split ($8 to Gina, $2 to Henry), but Henry quickly rejects the offer as unfair. Assuming Gina is interested in gaining financially from the experience and that she understands behavioral economics, we would expect her to

Answer 1

Answer:

C. offer a more unequal split ($900/$100) in order to gain more for herself and figuring Henry will accept the split because $100 is better than nothing.

Explanation:

Since in the question it is mentioned that the first round play $10 then for second it would be $1,000. Split ratio is 80 by 20 but the same is rejected by Henry

For understanding the behavioral economics, i.e decision making effects  she should offer more unequal split i.e $900 by $100 so that she gain more as compared to Henry and at the same time Henry accept the $100 thinking that it is better than nothing

Hence, the correct option is c.