Prevolio
Game theoryClassroom · multi-user

Ultimatum Game — Fairness & Rejection

Paired up, a Proposer splits 100 points and a Responder accepts (both paid) or rejects (both get nothing). Watch fairness beat cold self-interest.

You’ll learn: See why people reject 'free' money when a split feels unfair — contradicting the self-interested prediction that any positive offer is accepted.

Teacher guide

Students will learn to

  • Experience both sides of a take-it-or-leave-it bargain.
  • Contrast the game-theory prediction (offer the minimum, always accept) with what real people do.
  • Connect rejections of unfair offers to fairness norms and inequity aversion.

Before the session — ask

  • If someone offered you 5 of 100 points — free money — would you take it? Why or why not?
  • What split would a purely self-interested Proposer offer, assuming a purely self-interested Responder?

After the session — discuss

  • What was the most common offer, and how many low offers were rejected?
  • Why might a Responder give up real points to reject an unfair split?
  • How does this complicate the assumption that people only maximize their own payoff?

Timing

  • Briefing & pairing3–5 min
  • Offer & decide4–6 min
  • Reveal & discussion8–10 min

Run it with your class

Students join with a code or QR — no account needed. Teachers start a session from the dashboard.

Join with a codeFor teachers

What is the ultimatum game?

The ultimatum game is a two-player bargaining experiment that exposes the gap between cold self-interest and how people actually behave. A Proposer is given a sum — say 100 points — and offers some split to a Responder, who then either accepts (both are paid as proposed) or rejects (both get nothing). Standard game theory makes a stark prediction: a self-interested Responder should accept any positive offer, because a little is better than nothing, so the Proposer should offer the smallest possible amount. In reality, low offers are routinely rejected. People turn down 'free' money to punish a split that feels unfair, even at a cost to themselves — a behaviour driven by fairness, reciprocity, and inequity aversion (a dislike of unequal outcomes). Anticipating this, Proposers usually offer far more than the minimum, often close to half. The gap between the subgame-perfect equilibrium (offer the smallest amount, accept anything) and real behaviour is the whole lesson: fairness norms and the willingness to pay to punish unfairness — costly punishment — shape economic outcomes in ways pure self-interest can't explain.

How the simulation shows it

Paired up, a Proposer splits 100 points and a Responder accepts — both paid — or rejects, leaving both with nothing. Making or judging an offer yourself shows why fairness beats cold self-interest: stingy offers get rejected even though rejecting costs the Responder too, so Proposers learn to offer more.

Common misconceptions

Frequently asked questions

What is the ultimatum game?
A bargaining experiment where a Proposer offers a split of a sum and a Responder either accepts (both paid) or rejects (both get nothing). It tests fairness against self-interest.
What does game theory predict?
The subgame-perfect equilibrium: a self-interested Responder accepts any positive offer, so the Proposer offers the smallest possible amount. Real behaviour departs sharply from this.
Why do people reject low offers?
Because an unfair split feels worse than nothing. Driven by fairness, reciprocity, and inequity aversion, Responders pay a personal cost to punish a Proposer who offers too little.
What is inequity aversion?
A dislike of unequal outcomes — enough that people will sacrifice their own payoff to avoid or punish an unfair distribution, which is why low ultimatum offers get rejected.
How does it differ from the dictator game?
In the ultimatum game the Responder can reject, so offers may be strategic. The dictator game removes rejection, isolating pure generosity from the fear of rejection.

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