Bernd Schwarze: 3 ideas worth knowing

3 ideas from Bernd Schwarze, each explained in a minute and credited to the original work. Free on Savvy.

The game where 'free money' gets rejected on principle
In the ultimatum game, one player proposes how to split a sum and a second player can accept or reject it; a rejection means both get nothing. Classical economics predicts responde…
— Werner Güth, Rolf Schmittberger & Bernd Schwarze, An Experimental Analysis of Ultimatum Bargaining
Turn down free money to punish an unfair split? Most people do exactly that.
In Werner Guth's 1982 ultimatum game, one player proposes how to split a sum of money and the other can accept or reject it — rejecting means both walk away with nothing. A purely …
— Werner Guth, Rolf Schmittberger & Bernd Schwarze, An Experimental Analysis of Ultimatum Bargaining
Offer someone free money on unfair terms, and they'll refuse it out of spite
In the ultimatum game, one player proposes how to split a sum and the other can accept or reject, but rejecting means both get nothing. Rational self-interest predicts any positive…
— Werner Guth, Rolf Schmittberger, and Bernd Schwarze, An Experimental Analysis of Ultimatum Bargaining

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