Ultimatum Games, Solved with Human Root Motivation to Be Number One among Acquaintances

Abstract

In ultimatum game experiments, most subjects will reject very unfair distribution suggestions, such as 80:20 splits of given money. That is, economics experiments have disproved the hypothesis of economic man which insists that rational humans will always maximize their utility. However, academic circles do not know human root motivation; therefore, they cannot know the exact mechanism behind a large number of experimental data. In this paper, we illustrate how to rigorously solve ultimatum games. We first reveal the just distribution principle of social wealth; it is simply the proportional (to equity) distribution principle. We second explain why people commonly accept unjust wealth distribution; it is simply because they each need to compare with their respective neighbors in family wealth. With these two preparations, solving ultimatum games becomes a trivial matter. Actually, feasible solutions of any game do not depend upon splitting rates of given money; they depend upon growth rates of two players' endowments. On the other hand, any game possibly has a continuum of feasible solutions, suggesting that humans are easy to cooperate in economic scenarios; indeed, human economy flourishes.

Keywords: Ultimatum games, The just distribution principle, Human root motivation, Cooperation.

JEL Classification: A10, B41, D03