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Question
Consider the following decision tree and information when answering the following questions:
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 Aaronu2019s proposal, Jane chooses whether to accept or reject the split. If Jane accepts the split, both players receive the money according to Aaronu2019s 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 Aaronu2019s payoff, and the dollar amount to the right of the comma represents Janeu2019s payoff.
If Aaron were to offer an unfair proposal, experimental results show that Jane would likely punish him by making herself ________ off by ________ and rejecting his offer.
a. worse; $1
b. better; $1
c. worse; $999
d. worse; $500
e. worse; $1,000
Answer
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