Question

and a classmate (let's call him Dave) discover 1. You that your economics teacher has been secretly talking about notions such as "love," "fairness," and "decen- cy." Desperate to preserve his reputation in the com- munity of economists, he tries to buy your silence irn the following way. "You two sit silently at a table. I'll put down a hundred-dollar bill. You can take the bill, or pass the decision to Dave. Before Dave decides, I'll put another hundred-dollar bill on the table. If he passes, I'll add yet another bill to the table and you can have another turn. The game will end when someone takes the money, or when the $500 in my wallet is gone, whichever comes first." You both agree to keep quiet about your instructor's transgres- sions for the chance to play the game, and as your teacher indicated, you get the first turn. Suppose that each of you has passed twice, and your instructor has just put the last $100 bill on a. the table. It is your turn: What should you do? b. Suppose that you have passed twice, and Dave has passed once. Your instructor has just put the fourth $100 bill on the table. What should Dave do: Take the money or pass? Why? Suppose that you and Dave have each passed once. Your instructor has just put the third $100 bill on the table. What should you do: Take the c. money or pass? Why? Suppose that you have passed once. Your instructor has just put the second $100 bill on the table. What d. should Dave do: Take the money or pass? Why? Your instructor has just laid the first $100 bill on the table. It is your turn. Should you take the money or pass? Why? e.

Answer 1

Answer:

7. Given

Discussions about notions such as "love", "fairness", "decency".

(a)  each of you has passed twice, and your instructor has just put the last $100 bill on the table. It is your turn: What should you do:

You should take the money; otherwise, Dave will take it.

(b) you have passed twice, and Dave has passed once. Your instructor has just put the fourth $100 bill on the table. What should Dave do:

Dave should take the money. Dave knows that if he decides to pass, you will take the money on the

next turn.

(c)  suppose you and dave have passed once, and teacher put the last $100. It is your turn. What would you do:

I will not take the money because there are more turns left after that and if i pass money will definitely go to Dave .

(d) suppose you passed once and Teacher just put another $100. What should Dave do:

Dave will take the money because she knows that if she passes the I will definitely take the money and she will be left with nothing.

(e) teacher has just laid the first $100. Should you take it:

I will take the first 100 because Dave knows that i will definitely take money of 5th turn so she will take money on fourth. Now as i know that Jane will take money on fourth so i will take money on 3rd turn. Dave knows that i will take money on 3rd turn so she will take money on 2nd and as i know Dave will take money on 2nd turn so i will take money on 1st turn and will not give Dave any chance.

(f) what is the likely outcome of the game and Does your teacher pay the entire $500:

Dave knows that i will definitely take money of 5th turn so she will take money on fourth. Now as i know that Dave will take money on fourth so i will take money on 3rd turn. Dave knows that i will take money on 3rd turn so she will take money on 2nd and as i know Dave will take money on 2nd turn so i will take money on 1st turn and will not give Dave any chance. So the most likely outcome is that I will take money on first turn and teacher never have to pay entire $500