Ultimatum game

Definition

The ultimatum game is an experimental economics scenario where two players decide on how to divide a sum of money or resources. One player (the proposer) suggests a division, and the other player (the responder) can either accept the offer, in which case both players receive their respective shares, or reject it, in which case neither player receives anything.

Related terms

Behavioral Economics: The study of psychological, social, cognitive, and emotional factors on the economic decisions of individuals and institutions.

Rational Choice Theory: A framework for understanding and often formally modeling social and economic behavior based on the assumption that individuals act rationally to maximize their personal utility.

Game Theory: A theoretical framework for conceiving social situations among competing players and analyzing strategies in situations where individuals' choices are interdependent