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The Ultimatum Game is a simple game in which two players attempts to split a $100 reward. They can communicate with each other for 10 minutes, after which:
- Player 1 proposes an integer split (e.g. $75 for Player 1, $25 for Player 2)
- Player 2 may Accept or Reject this split. If Player 2 rejects, both players receive nothing. Otherwise, the money is distributed according to the agreed-upon split.
At first glance, the mathematical analysis is simple: Player 2 should always accept (since anything is better than nothing), so Player 1 should offer a 99-to-1 split to maximize their winnings.
Much of the commentary around this game revolves around the fact that when you play this... (read 1447 more words →)