The Ultimatum Game: Optimal Strategies Without Fairness

Games and Economic Behavior, Vol. 26, No. 2, pp. 221-252, 1999

Posted: 5 Feb 2020

See all articles by Stephen Burnell

Stephen Burnell

Victoria University of Wellington - School of Economics & Finance

Shuntian Yao

Nanyang Technological University (NTU) - Centre for Research in Financial Services (CREFS)

Lewis T. Evans

Victoria University of Wellington - New Zealand Institute for Study of Competition and Regulation Inc. (ISCR)

Date Written: 1999

Abstract

The ultimatum game is simple and this facilitates its use in the study of predictions of game theory. Experimental evidence suggests that it does not predict individual behavior well, unless individuals gain welfare from fairness in transactions, or have expectations about some wider game. Our model excludes any notion of fairness by including (potential) rivalry in transactions. In this game the proposer's expectations yield outcomes that are consistent with experimental evidence. Offers can be large or small, with none in an intermediate range. The consequent distribution appears in dictator game experiments. Our model explains how it is generated by expectations.

Keywords: Ultimatum game, Prediction, Game Theory, Fairness, Rivalry, Expectations

JEL Classification: C72, C78, D82, D84

Suggested Citation

Burnell, Stephen and Yao, Shuntian and Evans, Lewis T., The Ultimatum Game: Optimal Strategies Without Fairness (1999). Games and Economic Behavior, Vol. 26, No. 2, pp. 221-252, 1999, Available at SSRN: https://ssrn.com/abstract=1532505

Stephen Burnell

Victoria University of Wellington - School of Economics & Finance

P.O. Box 600
Wellington, 6140
New Zealand

Shuntian Yao

Nanyang Technological University (NTU) - Centre for Research in Financial Services (CREFS) ( email )

Nanyang Avenue
Division of Applied Economics
Singapore 639798
Singapore

Lewis T. Evans (Contact Author)

Victoria University of Wellington - New Zealand Institute for Study of Competition and Regulation Inc. (ISCR) ( email )

Wellington 6001
New Zealand
64 4 4635562 (Phone)
64 4 4635566 (Fax)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
742
PlumX Metrics