Ultimatum/Dictator Bargaining Game

Charles Holt

Welfare Economics: Allocative Efficiency, Externalities, Fairness, Altruism

Experiment Software

This program runs two-person, bargaining game. In the Dictator version, one person simply decides unilaterally how to split a fixed amount of money. In the Ultimatum version, the proposer makes an offer of how to split the money, which the responder either accepts or rejects. An acceptance implements the proposed split, and a rejection results in zero earnings for both. The game setup also allows a squish option, in which case the response to a proposal is a number on the unit interval, where 1 is full acceptance, 0 is rejection, and any fraction is a partial rejection that "squishes" both of the proposed payoffs down to that fraction of their original levels. The game highlights issues of fairness, equity, reciprocity, and strategy.