Güth and colleagues, 1982
They choose the split; you only accept or refuse. Refuse and you both get nothing. People refuse anyway.
Two people, 10,000 yen. Only one decides the split. The other can accept or refuse. Refuse and both get nothing, with no second round, against a stranger you will never meet again.
On payoff alone, accept anything above zero. And the proposer, knowing that, should offer one yen.
That is not what happens. Offers below about 20% get refused roughly half the time, and proposers typically offer around 40%.
A refuser throws away 1,000 yen. Only money, though — and they get something: the fact of having priced an unfair offer and turned it down.
We evolved in groups, where being pushed over once means being pushed over again. Telling people the game is one-shot does not switch that off.
It is less that the arithmetic is wrong and more that the arithmetic has more terms in it.
The game has been run all over the world. Both the typical offer and the refusal threshold vary a lot by place, and societies with more everyday market exchange tend to land nearer an even split.
It also moves depending on whether the proposer role was won by lottery or earned by a test score. Same numbers, different reception, depending on whether they seem entitled to the position.
The rounding on a split bill
Arguments over a few coins are never about the coins. Say "I will take the odd change" first and nobody minds at all.
A fair procedure buys acceptance of an unfair result.
Resale above face value
Buying gets you the thing you want, and plenty of people still refuse. The objection is that the seller does not seem entitled to that price — the exact shape of an ultimatum refusal.
The size of a raise
What your colleague got changes how yours feels. The absolute number went up and the mood went down, because people compare — another term in the arithmetic.
If you take one thing
Next negotiation, explain how you arrived at the number before you say the number. People mostly refuse the treatment, not the amount.
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