What is the ultimatum game and how do we solve it? That’s what we explore in this video.
The ultimatum game involves two players. The first proposes an offer of how to split money after being endowed with an initial sum. The responder knows both the total sum and the split that has been offered and may accept or reject the offer. If the offer is accepted, the money is split in the way the proposer recommended. If the responder rejects the offer, both players receive $0.
In the video below, we discuss the equilibrium outcome expected in the ultimatum game, a clip from the TV show Numbers with an ultimatum game, and more. Check it out below.