The Ultimatum Game Theory

Hello Class,

I have recently came across this show called “Numb3rs” ,(Numbers), and one of the episodes discusses the same thing we discuss in class, The Ultimatum Game Theory. In the show they talk about how humans think irrationally and they should accept any free/positive payout they receive. Essentially, any positive payout that was unprecedented or a such payout that one did not work for would be the type of scenario in which that same individual would accept a payment. The way in which this show relates to our text is when in the show states that game theory suggest that if an individual finds themselves in a situation where they feel like they lost in a deal or some sort of transaction, (in this scenario it is the situation where a stranger on a street tells them to divide $100 amongst themselves any way they want) they think irrationally. And the reason why they think irrationally is because if Person A ( the man in the show) gets $30, and Person B ( the woman) gets $70, – >Person A, shouldn’t, but may reject the deal because they are getting the short end of the deal. This is due to individuals/ players acting impulsively and irrationally. So basic theory suggests that we should always think rationally and think these types of situations through. This is exactly what we were talking about in class about how peoples behavior go against what game theory suggests should occur, and therefore game theory does not purely hold in this type of game.

Here is the link to the video->  https://www.youtube.com/watch?v=BfE4ZL08twA

Let me know you think.

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One thought on “The Ultimatum Game Theory”

  1. In some ways I don’t question if rejecting a 70-30 split is irrational for the simple fact that the person offering needs you just as much as you need them. In the initial case, you have nothing to lose, you don’t have the money and by chance got an opportunity to get $30 — which depending on how much money you have you may be indifferent to. On the other hand, the person offering the money in the game has everything to lose for the simple fact that if their offer is rejected they lost this opportunity, yet I could use $30 big time right now so I would gladly take that offer. However, if I had $1,000 I may reject it off of principle

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