The Ultimatum Game 💰

The Scenario

You and a computer player (the Proposer) are given a sum of money ($100). The Proposer offers a split of the money. You, as the Responder, can either **Accept** the offer or **Reject** it.

How much would you accept? How much would you reject out of a sense of fairness?

Example Payoffs (Total $100)

PC's Offer to You Your Choice Your Payout PC's Payout
$10 (PC gets $90) Accept $10 $90
$10 (PC gets $90) Reject $0 $0
$50 (PC gets $50) Accept $50 $50
$50 (PC gets $50) Reject $0 $0

A purely "rational" player (in classical economics) would accept any offer greater than $0, because getting something is better than getting nothing. However, human behavior often differs.

Play the Game! (5 Rounds)

You are the Responder. The computer will propose a split of $100. Decide whether to Accept or Reject.

The computer is making an offer...

Your Total Earnings: $0 | PC's Total Earnings: $0

Game History

Round PC Offer to You Your Choice Your Round Payout PC's Round Payout Your Total Earnings PC's Total Earnings

Conclusion: Key Lessons from the Ultimatum Game

The Ultimatum Game reveals fascinating insights into human decision-making, particularly concerning fairness and reciprocity:

  1. Rationality vs. Fairness: Economically, any offer > $0 should be accepted. However, most people reject offers they perceive as "unfair" (e.g., less than 20-30% of the total).
  2. Punishing Unfairness: Rejecting an unfair offer, even at personal cost, is a way to punish the proposer for their perceived greed.
  3. Anticipation of Rejection: Proposers often make fairer offers than pure self-interest would dictate because they anticipate responders might reject unfair splits.
  4. Cultural Differences: Studies show significant variations in rejection rates and acceptable offers across different cultures, highlighting the role of social norms.
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