Ultimatum Game

In an experiment, two strangers are given the opportunity to share $100, subject to the following constraints: One person—the "proposer"—is to suggest how to divide the money and can make only one such proposal. The other person—the "responder"—must either accept or reject the offer without qualification. Both parties know that if the agreed, but if the offer is rejected, neither will receive anything.

This scenario is called the Ultimatum Game. Researchers have conducted it numerous times with a wide variety of volunteers. Many participants in the role of the proposer seem instinctively to feel that they should offer 50 percent to the responder, because such a division is "fair" and therefore likely to be accepted. decisions primarily out of rational self-interest, one would expect that an individual would accept any offer.

Some theorists explain the insistence on fair divisions in the Ultimatum Game by citing our prehistoric ancestors' need for the support of a strong group. Small groups of hunter-gatherers depended for survival on their members' strengths. It is counterproductive to outcompete rivals within one's group to the point where one can no explains why proposers offer large amounts, not why responders reject low offers.

A more compelling explanation is that our emotional apparatus has been shaped by millions of years of living in small groups, where it is hard to keep secrets. Our emotions are therefore not finely tuned to one-time, strictly anonymous interactions. In real life we expect our friends and neighbors to notice our our self-esteem. This self-esteem helps us to acquire a reputation that is beneficial in future encounters.