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For many years, theoretical economists characterized humans as ration

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For many years, theoretical economists characterized humans as ration  [#permalink]

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New post Updated on: 27 Sep 2019, 01:14
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For many years, theoretical economists characterized humans as rational beings relentlessly bent on maximizing purely selfish reward. Results of an experimental economics study appear to contradict this view, however. In the “Ultimatum Game,” two subjects, who cannot exchange information, are placed in separate rooms. One is randomly chosen to propose how a sum of money, known to both, should be shared between them; only one offer, which must be accepted or rejected without negotiation, is allowed.

If, in fact, people are selfish and rational, then the proposer should offer the smallest possible share, while the responder should accept any offer, (20) no matter how small: after all, even one dollar is better than nothing. In numerous trials, however, two-thirds of the offers made were between 40 and 50 percent; only 4 percent were less than 20 percent. Among responders, more than half who were offered less than 20 percent rejected the offer. Behavior in the game did not appreciably depend on the players’ sex, age, or education. Nor did the amount of money involved play a significant role: for instance, in trials of the game that were conducted in Indonesia, the sum to be shared was as much as three times the subjects’ average monthly income, and still responders refused offers that they deemed too small.
The primary purpose of the passage is to

A. provide evidence in support of the view that human beings are essentially rational and selfish
B. use a particular study to challenge the argument that the economic behavior of human beings may be motivated by factors other than selfishness
C. compare certain views about human nature held by theoretical economists with those held by experimental economists
D. describe a study that apparently challenges theoretical economists’ understanding of human economic behavior
E. suggest that researchers may have failed to take into account the impact of certain noneconomic factors in designing a study of human economic behavior



The passage implies that the results of the Ultimatum Game undermine theoretical economists’ characterization of human beings by

A. demonstrating that most people are inclined to try to maximize their own advantage whenever possible
B. indicating that people who do not have the option of negotiating might behave more generously than do those who have the option of negotiating
C. illustrating how people’s economic behavior depends to some extent on how large a sum of money is involved
D. showing that most people instinctively place their own economic self-interest ahead of the interest of strangers
E. suggesting that people’s economic behavior might in part be motivated by factors other than selfishness



The author refers to the sum of one dollar (line 21) in order to

A. question the notion that the amount of money involved significantly affected players’ behavior
B. provide an example of one of the rare offers made by proposers that was less than 20 percent
C. illustrate the rationality of accepting even a very small offer
D. suggest a reason that responders rejected offers that were less than 20 percent
E. challenge the conclusion that a selfish and rational proposer should offer a responder the smallest possible share



All of the following are expressly mentioned in the passage as factors that did not significantly affect players’ behavior EXCEPT the

A. players’ level of schooling
B. amount of money to be shared
C. ages of the players
D. players’ professions
E. genders of the players



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Originally posted by vards on 29 Jan 2015, 03:53.
Last edited by SajjadAhmad on 27 Sep 2019, 01:14, edited 2 times in total.
Updated - Complete topic (701).
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Re: For many years, theoretical economists characterized humans as ration  [#permalink]

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New post 29 Jun 2017, 19:13
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1)For many years, theoretical economists characterized humans as rational beings relentlessly bent on maximizing purely selfish reward. However, results of an experimental economics study appear to contradict this view. It is clear that the however signals a change between what was said before and after it: economists believe human beings are rational, however results of the study say otherwise, i.e. that humans are not rational. The passage then goes on to show that humans do not act rationally in the expriements: If, in fact, people are selfish and rational, then the proposer should offer the smallest possible share, while the responder should accept any offer, no matter how small: after all, even one dollar is better than nothing. In numerous trials, however, two-thirds of the offers made were between 40 and 50 percent; only 4 percent were less than 20 percent, further reinforcing this idea: that the study contradicts economists view. answer is D, which clearly describes what the passage is doing.
2)"Behavior in the game did not appreciably depend on the players’ sex, age, or education. Nor did the amount of money involved play a significant role: for instance, in trials of the game that were conducted in Indonesia, the sum to be shared was as much as three times the subjects’ average monthly income, and still responders refused offers that they deemed too small". It implies that money does not play an important role by this we can safely eliminate Option C. Option A and D are out because of extreme answer choices. Option B does not make any sense. Left with option E which is correct answer choice.
3)"while the responder should accept any offer, no matter how small: after all, even one dollar is better than nothing". Option C clearly matches with this notion.
4)"Behavior in the game did not appreciably depend on the players’ sex, age, or education". As per this notion only option D is not mentioned in the passage.
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Re: For many years, theoretical economists characterized humans as ration  [#permalink]

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New post 24 Aug 2017, 08:28
Took 5 mins and 30 seconds, including 1 min 45 seconds to read the passage

1.The primary purpose of the passage is to
D.describe a study that apparently challenges theoretical economists’ understanding of human economic behavior- Correct - the passage describes a study by experimental economics about Ultimatum Game that challenges theoretical economists’ understanding of human economic behavior

2.The passage implies that the results of the Ultimatum Game undermine theoretical economists’ characterization of human beings by
E.suggesting that people’s economic behavior might in part be motivated by factors other than selfishness - If, in fact, people are selfish and rational, then the proposer should offer the smallest possible share , but the second paragraph tells that it was not the case

3.The author refers to the sum of one dollar (line 21) in order to
C. illustrate the rationality of accepting even a very small offer - "after all, even one dollar is better than nothing"

4.All of the following are expressly mentioned in the passage as factors that did not significantly affect players’ behavior EXCEPT the
Behavior in the game did not appreciably depend on the players’ sex, age, or education; Nor did the amount of money involved play a significant role
D. players’ professions
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Re: For many years, theoretical economists characterized humans as ration  [#permalink]

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New post 25 Aug 2017, 21:07
8 minutes and all correct. Passage is very easy and understandable though in some questions, POE is the best choice.
How we usually got many correct answers here and when in actual GMAT, We fade away and falter in many RC's. Experts??? Any view on this behavior??
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Re: For many years, theoretical economists characterized humans as ration   [#permalink] 25 Aug 2017, 21:07
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