The Ultimatum Game

11 years ago

Depends. Do I LIKE you enough to let you screw me out of almost the complete half - or is there something else involved that will make it worth playing the game? If you're only gonna give me a nickel of it, you better be someone I really like - and are going to buy me dinner.

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Steven Wagenheim

11 years ago

Somebody's been watching way too much Numbers

No, I wouldn't accept. Because since I am getting less than you, I'd rather
decline just to spite you.

That's how human nature is.

And that was a great show and a great episode. Remember it well.

Best episode was the Janus List. Wow, that was amazing.

Anyway, thanks for the retro.

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LynnM 11 years ago

I'd accept, in the hope that you'd feel really really guilty later on.
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- mickelinjac 11 years ago
  
  Originally Posted by LynnM
  
  I'd accept, in the hope that you'd feel really really guilty later on.
  
  I second that
  
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David Maschke

11 years ago

Thanks guys...

Originally Posted by Steven Wagenheim

Somebody's been watching way too much Numbers

No, I wouldn't accept. Because since I am getting less than you, I'd rather
decline just to spite you.

That's how human nature is.

And that was a great show and a great episode. Remember it well.

Best episode was the Janus List. Wow, that was amazing.

Anyway, thanks for the retro.

I've never heard of that show before.

It's a question from game theory. More specifically, it's a game that applies to traffic exchanges, and people asking for an email address for a free download.

It was your ebook on crap advertising that got me thinking about TE's and game theory.

My take away... ultimatums don't work, most of the time anyway.

Thanks
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MikeTucker

11 years ago

Originally Posted by David Maschke

Thanks guys...

I've never heard of that show before.

It's a question from game theory. More specifically, it's a game that applies to traffic exchanges, and people asking for an email address for a free download.

It was your ebook on crap advertising that got me thinking about TE's and game theory.

My take away... ultimatums don't work, most of the time anyway.

Check it out, it's a good show, if a little cheesy.
They use Game Theory (and other mathematics)
to solve crimes.

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Sumit Menon

11 years ago

Originally Posted by David Maschke

Thanks guys...

I've never heard of that show before.

It's a question from game theory. More specifically, it's a game that applies to traffic exchanges, and people asking for an email address for a free download.

It was your ebook on crap advertising that got me thinking about TE's and game theory.

My take away... ultimatums don't work, most of the time anyway.

If you were a friend of mine, I'd reject any offer other than 50-50 because any money I'm getting is not worth the bragging rights you'd have on me.

Now if a complete stranger came up to me and said that someone on the other side of the phone will make you an offer of a split on the $100 and you can take it or leave it, then I might even accept a nickel. But, as you've seen most people would act out of spite and I bet the person on the other side is aware of this nature and make a more fair offer if not 50-50.

So, my utility is not necessarily only the amount of money I'm getting but a sum of the money and its effect on my ego. So, the ultimatum game didn't fail per se, you just didn't consider the correct utility function before solving for the Equilibria.

If anyone's interested, they can play this game here -

Data Request

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MissTerraK

11 years ago

Originally Posted by David Maschke

Imagine if you and I were at a table, and someone drops $100 on the table, and tells us the rules of the game.

I have the power to propose how you and I are to split the money. You have the power to accept or decline the offer.

If you accept the offer, we both walk away with more money than when we started the game. If you decline the offer, we both lose out on the money.

If I proposed that I keep $99.95 and you get 5 cents, would you accept the offer? We both still walk away ahead in this game.

Or is the fact that it wasn't an even split more important to you, and you're more satisfied knowing we both get nothing?

What I want to know Dave, is why you put yourself in a situation where the odds are stacked against you in getting any financial gain out of it at all?

If you started out with a 50/50 split your odds are much higher of getting consent and getting some free cash. Wouldn't you rather have 50 bucks, than nothing?

To answer you question, I'd tell you to take your measly offer of a nickel and shove it!

It wouldn't be in the satisfaction of knowing you also got nothing, but would be to hopefully teach you a lesson about greed.

Terra

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Claude Whitacre 11 years ago

I think it's an interesting question. I may take $10....I know I would take twenty.

But less than ten? I would decline because it would be worth it to teach you a lesson.

Now, if we were allowed to talk to each other before the split? I think the results would be different.

Interesting experiment in human nature.
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LarryC

11 years ago

It would depend on the split. The way you stated it, I'd decline since .05 is trivial. However, if it was $75 - $25 in your favor I'd probably accept.

If the terms were that I had to decide before knowing the split, I'd decline because then you could make it anything you wanted.

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Dennis Gaskill

11 years ago

Here's the thing you have to figure out before making your offer, Dave...

At what point will the money I get be more important to me than the satisfaction I'd get from denying you the money to teach you a lesson about being greedy?

A nickel ain't gonna do it.

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Hogre

11 years ago

I've read about this same experiment in "Influence:Science and Practice" by Robert Cialdini.

To get the most money out of this deal,you first propose a ridiculous amount to be awarded to you.Like the one you proposed.Then you retreat to a more sensible number (the one you were after all along) like 80-20 or 70-30%.

That way, it looks as though you've made a concession and the other party feels they need to reciprocate and make a concession of their own,which is to comply with your request.

It's called Rejection - Then - Retreat technique.

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Sumit Menon

11 years ago

Originally Posted by Hogre

I've read about this same experiment in "Influence:Science and Practice" by Robert Cialdini.

To get the most money out of this deal,you first propose a ridiculous amount to be awarded to you.Like the one you proposed.Then you retreat to a more sensible number (the one you were after all along) like 80-20 or 70-30%.

That way, it looks as though you've made a concession and the other party feels they need to reciprocate and make a concession of their own,which is to comply with your request.

It's called Rejection - Then - Retreat technique.

That'd be something like Rubenstein Bargaining. In the Ultimatum game you get only one chance to an offer.