Rules and Setup
One subject gets 100 Bucks, this subject may share some money with the other subject.
If the other subject accepts the split, it will happen. If the other subject declines, then the deal breaks and both subjects get nothing.
Game theory: Any offer should be accepted, because even 1 Buck is better than 0 Bucks
Strategy of Subject 1:
- Offer the minimum amount
- Subject 2 accepts offer and gets minimum amount
- Subject 1 gets maximum amount
In the lab: a lot of rejections
- money is not utility
- example: 2. Experiment 9 - Ultimatum Game
Extensive Form
- 1 subgame equilibrium
- minimum given to player 2, they have to accept
- minimum given to player 2, they have to accept
Real Life Example
- any price offering which cannot be haggled for
- e.g. supermarket price - take it or leave it
Behavior
- same equilibrium as in Dictator Game
- behavior tells a different story
- in an Ultimatum Game the offers are much higher
