NSCS 320 Lecture Notes - Lecture 27: Richard Thaler, Cass Sunstein, Ultimatum Game

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Libertarian paternalism is at the core of this lecture about nudges. We talked about the ultimatum game and dictator game, and how important the perception of fairness is. We analyzed brain regions that are activated by unfair offers - this is very basic in cognition and emotion. We are disposed to suffer a cost (a loss) in order to punish intentionally unfair behavior in others. We have two persons, two firms, two hotels and similar. The net economic result of their actions is strictly the same for both and strictly the same for the customer, however, one is judged to be acting fairly while the other is judged to be acting unfairly. University 1 automatically enrolls all students in the rec center, adding to the tuition fee. Students are free to opt out and receive a reimbursement of . University 2 has a rec center, in which every student is encouraged to enroll by paying .

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