Question

The ultimatum game is a popular research tool for studying topics such as fairness and altruism. The game itself is simple. Two players are told that they will be dividing up a sum of money. One player is designated as the proposer. Her job is to suggest a division of the sum. The second player is designated the responder, and he decides to either accept the proposed division (in which case the division stands and each player is paid accordingly) or to reject the proposed division, in which case both players get nothing.

Part 1 (1 point) See Hint Consider an implementation of the ultimatum game in which the players divide up a pot of $60. To keep the analysis easier, you can assume that all divisions must occur in $1 increments. What is the rational, game-theoretic solution to this game?
A. The proposer suggests a 50/50 division (so each player would get $30), and the responder rejects.
B. The proposer suggests an uneven split favorable to herself (so the proposer would get $36, and the responder would get $24), and the responder accepts.
C. The proposer suggests an uneven split favorable to the other player (so the proposer would get $24, and the responder would get $36), and the responder accepts.
D. The proposer suggests close to an all/nothing split favorable to the other player (so the proposer would get $1, and the responder would get $59), and the responder rejects.
E. The proposer suggests an uneven split favorable to the other player (so the proposer would get $24, and the responder would get $36), and the responder rejects.
F. The proposer suggests close to an all/nothing split favorable to the other player (so the proposer would get $1, and the responder would get $59), and the responder accepts.
G. The proposer suggests an uneven split favorable to herself (so the proposer would get $36, and the responder would get $24), and the responder rejects.
H. The proposer suggests a 50/50 division (so each player would get $30), and the responder accepts.
I. The proposer suggests close to an all/nothing split favorable to herself (so the proposer would get $59, and the responder would get $1), and the responder accepts.
J. The proposer suggests close to an all/nothing split favorable to herself (so the proposer would get $59, and the responder would get $1), and the responder rejects.
Part 2 (1 point) See Hint When this game is played with real people, does the result typically match the game-theory prediction discussed in Part 1? yes no

Answer 1

1. The rational, game-theoretic solution to this game is:

H. The proposer suggests a 50/50 division (so each player would get $30), and the responder accepts.

2. No. When this game is played with real people, the result does not typically match the game-theory prediction discussed in Part 1.

Explanation:

Players in a game respond with different strategies, which are usually unknown to the second player. While people are expected to act rationally, most times, they do not. They are propelled by different rationality and preferences. Therefore, players' game strategies are unpredictable.