ECON-2006EG Study Guide - Quiz Guide: The Ultimatum
7 Mar 2021
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Document Summary
Tit-for-tat and the repeated prisoner"s dilemma: each player gets a higher payoff when all players cooperate than when all defect -> so there is a need to penalize those who defect -> hard to achieve. |a strategy for the repeated prisoner"s dilemma in which players cooperate on the first move, and then mimic their partner"s move on each successive move. First time you interact with someone, you cooperate. In each subsequent interaction you simply do what that person did in the previous interaction. Fear of retaliation deters people from defecting. Ultimatum bargaining game |one in which the first player has the power to confront the second player with a take-it-or-leave- it offer. Player 1 offers a positive amount between -10 to player 2 and then player 2 can choose to accept the offer and take x amount of money, or reject and neither of the player gets anything. Timing of moves determines the outcome of the ultimatum bargaining game.
