The economics of fair play

Sigmund, K., Fehr, E., & Nowak, M.A. (2002). The economics of fair play. Scientific American 286 (1) 82-87.

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Imagine that somebody offers you $100. All you have to do is agree with some other anonymous person on how to share the sum. The rules are strict. The two of you are in separate rooms and cannot exchange information. A coin toss decides which of you will propose how to share the money. Suppose that you are the proposer. You can make a single offer of how to split the sum, and the other person-the responder-can say yes or no. The responder also knows the rules and the total amount of money at stake. If her answer is yes, the deal goes ahead. If her answer is no, neither of you gets anything. In both cases, the game is over and will not be repeated. What will you do?

Instinctively, many people feel they should offer 50 percent, because such a division is "fair" and therefore likely to be accepted. More daring people, however, think they might get away with offering somewhat less than half of the sum.

Item Type: Article
Research Programs: Adaptive Dynamics Network (ADN)
Bibliographic Reference: Scientific American; 286(1):82-87 (January 2002)
Depositing User: IIASA Import
Date Deposited: 15 Jan 2016 02:14
Last Modified: 27 Aug 2021 17:37

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