Consider the Same Ultimatum Game as in the Previous Question

Consider the same ultimatum game as in the previous question but consider some new preferences reflecting a desire for fairness. In particular,now assume players get 1 util per dollar earned but lose 1/4 util for the absolute difference between their monetary payoffs. Which of the following is an offer that arises in a subgame-perfect equilibrium with these new preferences?

A) 1.
B) 2.
C) 4.
D) 5.

Correct Answer:

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