Would you accept this?

[PROGRESSIVE1]

There is ONE HUNDRED DOLLARS. I keep $60 dollars and you get $40 dollars.

Here's the catch, If you accept this offer you get the $40, but if you reject it, NO ONE gets any money. In this theoretical situation, would you accept? It is up to you, not me, to determine what happens.

If you reject this offer, I do not get any money either.

[Randi_Listener]

1. What the fuck are you talking about?

My fucking head is spinning.

[SidDithers]

2. Whew... thought I was the only one nt

Sid

[MisterP]

4. maybe it's orders to lockstep

[Goldmund]

5. I think he may be talking about the Democratic

senators and representatives.

[cry baby]

3. I'll bite...I'd take the money.

[MsTryska]

6. does the no one getting any money include you?

if so, jsut to be ornery i say hell no. not without full disclosure of where the money came from and what it's for.

[PROGRESSIVE1]

7. I don't get any money either.

[MsTryska]

9. okay, so since i get to decide

the outcome for everybody, i say no, until i'm provided with full disclosure of where it came from, and why we are all getting a cut.

better yet, while we're at it, let's come up with a more equitable divvy of said funds.

[Rex]

8. I get the $60

If you make an offer under false pretenses then I cannot be held responsible since you have knowledge about something that could effect the offer and did not tell me. I take the $60 (because I know you are doing something illegal and so we bargain), if something bad happens then I sue you!
:evilgrin:

[MichiganVote]

10. I'd like the whole $100 please. If $40 is mine, the rest it too

[PROGRESSIVE1]

12. If you don't agree to the deal in these exact terms, no one gets anything.

I get 60, and you get 40. Take it, or leave it.

[MichiganVote]

35. But, but, but....I'm a tax paying citizen, don't you know?

Oh yeah, I guess you knew that.

[MissWaverly]

11. sounds like Bush SSN plan to me

and no I don't want to take the risk of investment, so that someone else gets the majority of the profit.

[madinmaryland]

13. Who's $100 is it? And is this legit?

Do i have to pay taxes and FICA on it? Since you are paying then you must cover the 7.5% of the FICA.

[Skip Intro]

14. Where does the $100 come from?

It won't just materialize, will it. It has to come from somewhere?

(and can we use Euros instead?)

[lostinacause]

15. I'm going to burst everyone's bubble

This is a economic experiment that is done to determine how people behave. It is a test of "rationality". This is a simplified version of the test. The version that is usually done is; there are two people, one person has to give a fraction of their choosing to the other person. The other person can then accept or reject. If she accepts then they both get the money. If she rejects then neither get the money. The typical amount that the deal usually works out to is between thirty and forty percent of the total amount. If it were done with a hundred dollars or ten thousand dollars the same result would be expected.

Yes I would take the 40 dollars

[lostinacause]

16. Add: the significance of this test is that under the

typical economic assumption of utility maximization the person who makes the offer would offer a penny because the other person would be better off then they were before they were given the penny. In reality if someone made the deal for a penny the person choosing to accept or reject would laugh at them and reject the deal.

[muriel_volestrangler]

36. Same question to you as in posts #13 and #14

(and which the OP hasn't bothered to answer yet). Whose money is it now? How was it assigned to them? The whole exercise is meaningless without knowing that. When one says "no-one gets the money" does this mean that a bill is just set fire to or otherwise destroyed?

[lostinacause]

38. This is a research project.

The people doing the research provide the money. There are some practical extensions to this like economic development.

[Yupster]

37. Very interesting

I hadn't heard of that test, but it makes good sense to me and I can see lots of applications.

[lostinacause]

39. This is a game theory situation

Most people find game theory to be the most interesting part of economics. The concepts that interest me most are economic efficiency and political applications of economics.

[3lefts]

18. Also known as "The Ultimatum" game

that is taught in Game Theory, usually in MBA programs but now taught to undergrads too.

[OfTheTaco]

31. I think I took something like

This in my political science class, Anyone else do the "red, Black" exercise?

[Trillo]

17. For some reason this reminds me of Fractional Reserve Banking. n/t

[Selatius]

20. Fractional reserve is funny

I am the bank. You deposit 100 dollars with me. The reserve ratio is 10%. This means I loan out 90 dollars and charge interest on it and keep the last 10 for you. If you come back and try to withdraw all of your money at once, I could be in trouble if I don't have enough money in my pocket to cover the difference. If all my customers, not just you, tried to withdraw all their cash (as in a panic), I will declare bankruptcy, and your money is lost.

This is why the banks failed in 1929.

[Trillo]

22. At the risk of taking this discussion in an unintended direction,

How much does the bank make from loaning out the $90?

If it's deemed inappropriate for this thread, please ignore.

[Selatius]

24. Depends on the interest rate the bank charges folks

I could take, say, 10 of that 90 and loan it to customer A, and I'll charge him something like 5% or something over a 10 month period. Each month, he will pay me back a dollar plus 5% on top of that until it is all repaid.

I keep the 5% as profit at the end, and I can reloan that 10 to customer B or even another bank and do it over again. Usually, if it is a savings account you have with me or some other interest bearing account, some of that 5% is going to go to you as interest on the account, and the rest goes to me.

Of course, it's not going to be 50-50. Usually, I, the bank, get the larger slice of the profit. You get the left-over. It's a crude example, but that's how it generally is.

By definition though, this activity causes inflation.

[Trillo]

25. Thanks, I thought so. This activity of yours causes inflation.

My $100 isn't worth as much as it used to be worth.

Now, lets assume this banking activity goes on for an 'almost' infinite period of time. Who ends up with all the money?

[Selatius]

29. The banker provided there are no adjustments to account for inflation

A person who made 15,000 a year 60 or 70 years ago was better off than a person who makes 15,000 a year today thanks to inflation. In reality, the median wage has stagnated, especially within the last 10 years. It's only been the few at the top who've made the bulk of the gains.

Might want to ask yourself what was the purchasing power of, say, the minimum wage in the past compared to today. That'll give you a guage of where things are currently heading.

[Godai Kyoko]

28. irrelevant.

For the purposes of banking, the interest is irrelevant. It is only book entries until the money comes back.

The only thing that is of any importance is that the guys who loaned you the money don't need it all at once.

In theory, the money you loan out is then put in a bank account at your bank and becomes an "asset." And if you have an asset, you can make loans against it. If your customers pay each other in checks against your bank, then they aren't really withdrawing from you, just from their own accounts. You keep the $10 in case of emergency, but most of the time you just shuffle paper. After all, the reason people put money in banks is because it is dangerous to carry around.

The last time I paid attention to this, the Fed had a reserve requirement of around 16%, and they had been dropping it steadily for years. I am sure it even lower now than it was then.

[Dookus]

19. It's all an effort

to discover the true price of spite.

[TankLV]

21. I'd like us both to get the same amount.

If you get more than me, then I'd rather NO ONE get ANYTHING.

I didn't ask for the money.

I don't need the money.

It is an offer out of the blue.

Fuck the inequity.

Either everybody gets the same, or NOBODY gets ANYTHING, thereby insuring that we are both treated EQUALLY.

I choose not to play the game.

[3lefts]

23. What if it were

a million dollars and you get $400,000?

or

a billion dollars and you get $400,000,000? Would you turn down four hundred million dollars (without recourse) because you feel you are not being treated EQUALLY?

[hfojvt]

27. really, my take on the question

was that it had something to do with progressive taxes. The CEO of the 1970s got a $20 million salary and the Federal Goverenment took 70% of it. So most CEOs really did not want the money. Then when Reagan knocked the top rate down to 40% CEO salaries took off. Only in this real-world case, the money does not vanish if the CEO does not take it - it turns into more profits, higher shareholder returns, higher wages for other workers, and stronger companies. It is time to bring back the 70% tax rate for incomes over $500,000.

[Godai Kyoko]

26. Sort of a reverse prisoner's dilemma

I would bite at 10 for me and 90 for you. The only way I loose is if I decide to be a prick. So I will be magnanimous.

[safenfun]

30. who does the WORK ?

NO WORK.NO YIELD.VALID EARTHWIDE.

[lostinacause]

40. Your thinking to hard.

Even economics students try to add unnecessary complication to problems. When complexities increase causality becomes harder to analyze and establish.

[sandnsea]

32. I don't know you

I don't know what you'd do with your money. Definitely matters. Long term gains don't always come with short term benefits.

[Jesus Saves]

33. It depends on

whether I like you or not.

[lostinacause]

41. The typical situation is that the two parties involved are not in contact

when the decision is made.

[Speed8098]

34. No....................n/t

[johncoby2]

42. That isnt progessive. It is stupid. Eom