Edgar and Felicity are players in an ultimatum game for $100, where Felicity is the proposer and Edgar is the responder. Suppose that Felicity proposes that she receive $95, while Edgar receives only $5. How would behavioral economists expect Edgar to respond

Question

Mathematics

Salvatore Rosales

2 October, 09:43

Edgar and Felicity are players in an ultimatum game for $100, where Felicity is the proposer and Edgar is the responder. Suppose that Felicity proposes that she receive $95, while Edgar receives only $5. How would behavioral economists expect Edgar to respond

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Oneill · Answer 1

Even though Edgar would be better off having $5 versus nothing, Edgar will likely see the offer as unfair and reject it

Step-by-step explanation:

Behavioural economists study the effects of emotional or psychological factors on the economic decisions of a person.

Edgar's emotional bias due to the feeling of being cheated in behavioural economics, would most likely result to his rejection of the offer, despite being better off with a profit from the deal.