Glossary
Ultimatum game
What is the ultimatum game?
The ultimatum game is an experimental paradigm in which one player proposes how to split a sum of money and the other player accepts or rejects the proposal. If rejected, both players receive nothing.
How it works
If participants care only about their own monetary payoff, a responder should accept any positive offer, and a proposer anticipating this should offer the smallest available positive amount. This prediction depends on those preference assumptions. Rejecting an offer may be consistent with preferences for fairness or punishment, rather than a failure of rationality.
Example
For example, a responder offered $10 from a $100 total can accept the $10 or reject the offer so that neither player receives money. The rules make rejection costly. Whether an offer is rejected depends on the participants and experimental setting; there is no universal rejection threshold.
What the early experiments found
In the simple-money condition of Güth and colleagues’ experiment, participants divided sums of 4–10 Deutsche Marks, with a second round one week later against different opponents. Bearden’s review reports that 6 of the first round’s 21 proposals divided the money equally, and all six were accepted. Only two proposals matched the money-only game-theoretic prediction; one of those was rejected.
Both generous offers and a rejected minimal offer depart from that narrow prediction. Offers can reflect concern for fairness, an expectation of rejection, or both. These choices do not, by themselves, identify each player’s motive or establish a fixed cutoff for an acceptable offer.
Why it matters
The game helps researchers examine bargaining, fairness, and responses to unequal allocations. Güth and colleagues introduced an influential experimental version in 1982.
The trust game examines a different social decision: whether to transfer resources to someone who can choose to reciprocate.