Loved one child more than the other

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Reference no: EM137812

Q1. Gary has two children, Kevin and Dora. Each one consumes "yummiest" and nothing else. Gary loves both children equally. For example, he is equally happy when Kevin has two yummiest and Dora has three, or when Kevin has three yummiest and Dora has two. But he is happier when their consumption is more equal. Draw Gary's indifference curves. What would they look like if he loved one child more than the other?

Q2. The "dictator game" differs from the ultimatum game only in that person 2 does not have the option to reject person 1's offer (and thus has no strategic role in the game). The "impunity game" differs from the ultimatum game only in that person 1's payoff when person 2 rejects any offer x is c - x, rather than 0. (The game is named for the fact that person 2 is unable to "punish" person 1 for making a low offer.) Find the sub game perfect equilibria of each game.

Reference no: EM137812

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