Players are placed in pairs: one player is the Proposer, the other the Responder. The Proposer proposes a split $100. If the Responder accepts the proposal, payoffs are determined by the accepted proposal. If the Responder rejects the proposal, both earn nothing.
This game teaches students about how social norms such as fairness and altruism may result in behaviors that deviate from game-theoretic predictions.
This game differs from our standard Ultimatum Game in three ways. First, every player plays both as a Proposer and a Responder. Second, Responders indicate the smallest offer they would accept rather than accepting or rejecting a known offer. Finally, total payoffs are the sum of payoffs as Proposer and payoffs as Responder, with each player’s offer being matched with every player’s smallest acceptable offer.