The Ultimatum Game
The game goes like this. A "proposer" is given an amount of money, typically, $10. He has to split this money with a "responder".
The character of the split is up to the proposer. He can split the money 50-50, 60-40, whatever he wants, ranging from giving it all away to keeping it all for himself.
The kicker is that the responder gets to decide whether to accept the proposer's offer. If he does, then both keep whatever the proposer's split provides for. However, if he rejects the proposal, then neither gets anything. (P1 110,111)
When the game is played, the most common proposal is 50-50. But rationally, even a 90-10 split should be acceptable to the responder. After all, $1 is better than nothing.
But in fact, that …show more content…
One of the interesting correlations is that, the more widespread a trading economy is in the society in which the game is being conducted, the more likely it is that the proposer will offer a deal that the responder is inclined to accept. Where there was little trade, the attitude of the proposer seemed to be, "It's mine, and I'll keep it," and the responder's attitude was, "I don't expect anything from you, and anything you give me, no matter how picayune, I'll accept." Another interesting correlation is that, in societies where gifts come with strings attached (you're now indebted to the gift giver), even generous proposals were turned down. (P1 …show more content…
Here's the argument.
There’s a segment of society, maybe 25 percent, who are “saints”. They contribute to the common good out of sense of responsibility, regardless of what everyone else is doing.
Another segment of society, maybe another 25 percent, are "free loaders". They take advantage of the benefits provided by collective actions but make no contribution themselves.
The rest of society is made up of "moralists". The moralists resent the actions of the free loaders, and as long as the free loaders continue to get away with their exploitation, the moralists refuse to contribute to the common good.
Given the situation described thus far, it’s clear that, no matter how sincere the saints, their actions, by themselves, are never going to result in a society with social solidarity. Instead, the society is on its way to disintegration.
However, if the moralists are given the opportunity to punish the free loaders for their actions, the moralists become willing to sacrifice some of their own self-interest to see that punishment is carried
The game goes like this. A "proposer" is given an amount of money, typically, $10. He has to split this money with a "responder".
The character of the split is up to the proposer. He can split the money 50-50, 60-40, whatever he wants, ranging from giving it all away to keeping it all for himself.
The kicker is that the responder gets to decide whether to accept the proposer's offer. If he does, then both keep whatever the proposer's split provides for. However, if he rejects the proposal, then neither gets anything. (P1 110,111)
When the game is played, the most common proposal is 50-50. But rationally, even a 90-10 split should be acceptable to the responder. After all, $1 is better than nothing.
But in fact, that …show more content…
One of the interesting correlations is that, the more widespread a trading economy is in the society in which the game is being conducted, the more likely it is that the proposer will offer a deal that the responder is inclined to accept. Where there was little trade, the attitude of the proposer seemed to be, "It's mine, and I'll keep it," and the responder's attitude was, "I don't expect anything from you, and anything you give me, no matter how picayune, I'll accept." Another interesting correlation is that, in societies where gifts come with strings attached (you're now indebted to the gift giver), even generous proposals were turned down. (P1 …show more content…
Here's the argument.
There’s a segment of society, maybe 25 percent, who are “saints”. They contribute to the common good out of sense of responsibility, regardless of what everyone else is doing.
Another segment of society, maybe another 25 percent, are "free loaders". They take advantage of the benefits provided by collective actions but make no contribution themselves.
The rest of society is made up of "moralists". The moralists resent the actions of the free loaders, and as long as the free loaders continue to get away with their exploitation, the moralists refuse to contribute to the common good.
Given the situation described thus far, it’s clear that, no matter how sincere the saints, their actions, by themselves, are never going to result in a society with social solidarity. Instead, the society is on its way to disintegration.
However, if the moralists are given the opportunity to punish the free loaders for their actions, the moralists become willing to sacrifice some of their own self-interest to see that punishment is carried