1 / 5

Economics 202: Intermediate Microeconomic Theory

Economics 202: Intermediate Microeconomic Theory. Review #2 … coverage. Game Theory. “Vote by Alternating Veto” Player 1 prefers X to Y to X, Player 2 prefers Z to Y to X. Find Nash equilibria and subgame perfect Nash equilbria. Ultimatum Game. Rules

Download Presentation

Economics 202: Intermediate Microeconomic Theory

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Economics 202: Intermediate Microeconomic Theory • Review #2 … coverage

  2. Game Theory • “Vote by Alternating Veto” • Player 1 prefers X to Y to X, Player 2 prefers Z to Y to X • Find Nash equilibria and subgame perfect Nash equilbria

  3. Ultimatum Game • Rules • Two players are allotted a sum of money (the “stake”) • Assume $20 stake • The “proposer” offers a % of the total to the “responder” • can only offer in even $1 amounts • Responder may either accept or reject • If accepted, responder gets amount offered • If rejected, both players receive $0

  4. Summary of Ultimatum Game Results LAMachiguengaYogyakartaTucsonPittsburghTokyo # Pairs 15 21 37 24 27 29 Stake size $160 $160 $80 – 120 $10 $10 $10 Average .48 .26 .44 .44 .45 .45 Mode .50 .15 .50 .50 .50 .50 Rejection 0 .048 .081 .083 .22 .24 Rej < 20% 0/0 1/10 0/0 na 0/1 2/4 • Behavior deviates from that predicted by “game theory” • UG results are robust to stake size, degree of anonymity • Where do people get their rules, expectations, and notion of fairness from? • Why do they vary across societies? How might they affect economic behavior? • Henrich, Joeseph (2000), “Does Culture Matter in Economic Behavior? Ultimatum Game Bargaining Among the Machiguenga of the Peruvian Amazon,” American Economic Review, vol. 90, no. 4, September, pp. 973 – 979.

  5. The Prisoner’s Dilemma Farmer B • “Tragedy of the Common” • How many yaks to graze on the village common? • How many Chilean sea bass to catch and bring to market? • What values would make this a Prisoner’s Dilemma? • Play once • Play twice • Play infinitely 5 bass 4 bass 1 ? 5 bass 1 ? Farmer A 2 ? 4 bass ? 2

More Related