My favorite economic game is the Ultimatum Game. This is an economic game in which two players interact to split a sum of money. The first player proposes an offer that the second player either has to accept or reject. If the second player accepts the first player’s offer, then they split the money according to the offer. However, if the second player rejects the offer, then neither of the players wins any money.
This is my favorite economic game because studies have shown that people do actually reject offers. In my opinion, rejecting an offer makes no sense at all, even if the offer is too small or imbalanced. I could understand someone rejecting an unfair offer to save his or her pride, but in a game where
one’s opponent is a computer, I just do not understand why someone would ever
reject an offer.
Above is a short video clip explaining the Ultimatum Game in terms of two children dividing a dozen cookies.
I almost selected this as the game for my blog but ultimately went with prisoner's dilemma. I like this game for the same reason you do though. I just cant explain to myself why people would reject an offer. It's as simple as accept and receive money or reject and don't receive money. And like you said when you're going against a computer it should eliminate any though of saving pride.
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ReplyDeleteI agree that the fact that people reject offers in this game is interesting. I think it's less pride and more a sense of not wanting to see someone else prosper relatively more than you-which is why I agree that there's no logical explanation for why someone would reject an offer made by a computer. I might understand Tommy not wanting to watch Angelica shove her face full of 11 cookies while he only gets 1, but it's not like a computer is actually going to get the cookies or spend the money because it doesn't really exist. Maybe it's our tendency to anthropomorphize? Whatever it is, it doesn't make sense to me.
ReplyDeleteHey Ross!
ReplyDeleteI wrote about the ultimatum game too—except, it doesn't surprise me that people would reject the offer. We're people, not robots or perfectly "rational" beings, and when we see something that's unfair, it often pisses us off and it's precisely that visceral, emotional response that guides our decision making in ultimate game type scenarios. However, I do think that being aware of this fact through studying economic games can help us make more "lucrative," rational decisions in real-life situations.