Natural Rationality | decision-making in the economy of nature


The Ultimatum Game Outside The Lab

In the ultimatum game, a ‘proposer’ (Alice) makes an offer to a ‘responder’ (Bob) that can either accept or refuse the offer. The offer is a split of an amount of money. If Bob accepts, he keeps the offered amount while Alice keeps the difference. If Bob rejects it, however, both players get nothing. According to game theory, rational agents must behave as follows: Alice should offer the smallest amount possible, in order to keep as much money as possible, and Bob should accept any proposed amount, because a small amount should be better than nothing. Thus if there is $10 to split, Alice should offer $1 and keep $9, while Bob should accept the split.
The ultimatum game has been studied in many contexts where different parameters of the game were modified: culture, age, sex, the amount of money, the degree of anonymity, the length of the game, and so on. The results show a robust tendency: the game-theoretic strategy is rarely played, because people tend to make fair’ offers. While proposers offer about 50% of the amount, responders tend to accept these offers while rejecting most of the ‘unfair’ offers (less than 20%). Since the rules of the game are quite simple, subject do not deviate from optimal strategy because they did not understand them. Rather, normal subjects seem to have a tendency to cooperate and value fairness

In a newspaper version of the ultimatum, researchers found that "older participants and women care more about equal distributions and that Internet users are more self-regarding than those using mail or fax". The results, however, confirmed that standard results are valid outside the lab.