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Study Notes

Ultimatum game

AS, A-Level, IB
AQA, Edexcel, OCR, IB, Eduqas, WJEC

Last updated 21 Mar 2021

In the ultimatum game, two players are shown a sum of money, say, £10.

One player, the proposer, is told to offer some figure (ranging from £1 to £10) to the second player, who is the responder.

If the responder accepts the proposer’s offer, the money is shared according to the offer.

But if the responder refuses the offer, each player gets nothing.

The self-interest hypothesis suggests that the proposer should offer the minimum (£1) and the responder should accept it—£1 isn’t much, but it is still a gain.

However, only a minority of people behave in this manner. Average proposer offers are often one-third to one-half of the overall amount.

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