I came across a cute video about game theory.

The video is about an experiment where children are asked to share a pile of chocolate coins. The twist to is they had to follow the rules of the ultimatum game.

Specifically, here is how the game worked. One child got to offer a split of the chocolate (“9 pieces for me, 1 for you”). Then, the other child could either accept the split and take the candy. Or, she could reject the split and both would go home empty-handed.

What should happen? Game theory predicts the proposer has the advantage. In theory, the second player–the one hearing the proposal–should be favorable to most offers. The reason is that rejecting an proposal leads to a zero payout. It is better to get something rather than nothing, so the second player is likely to accept most offers even if she ends up with little. Consequently, the proposer can make almost any offer and will make one that gives him most of the chocolate. In effect, the proposer can make an ultimatum which the second player will find hard to refuse.

Of course, the game does not always works so smoothly in practice. How do the children play this game?

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"All will be well if you use your mind for your decisions, and mind only your decisions." Since 2007, I have devoted my life to sharing the joy of game theory and mathematics. MindYourDecisions now has over 1,000 free articles with no ads thanks to community support! Help out and get early access to posts with a pledge on Patreon. .

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Watch this entertaining video on youtube to find out:

Link to youtube video: the ultimatum game

*I am in the dark about the show. I would be very grateful to anyone that can identify the source of this show/experiment.

My video transcription

Narrator: In this experiment, seven and eight year olds are sharing a stash of ten chocolate coins. One child decides on how they are split, and they can offer as many or as few coins as they like.



Children in experiment: [offer various splits from one to three coins]



Narrator: At first they keep more for themselves. But there is a catch. It is the other child who gets to decide if the split is fair. If not, they can refuse the offer. And then, both children have to go away empty-handed. Will they get away with it?



Children in experiment: [almost all reject small offers]



Child 1: What do you mean [you reject]? That means you don’t get any chocolate!



Child 2: I don’t care. It’s already too little.



Narrator: Almost all of the children reject the smaller share, preferring to have nothing at all. It may seem strange, but it is not. By going without themselves, they are punishing their partner who loses even more chocolate. And they are not going to forget that in a hurry. Look what happens when the experiment is repeated.



Children in experiment: [most offer nearly even split]



Narrator: Now, with a fairer split, what will the response be?



Children in experiment: [most accept nearly even split]



Narrator: The children are happy to accept. It is not difficult to see why we have evolved this way. If we react instinctively against people who cheat, they will think twice before trying it again. And it has left us all with a taste of fairness.

This video raises many interesting questions. Here are a few thoughts that came across my mind:

What game are we playing?

In the first round, many of the children give small offers which are rejected. This comes as a surprise to many of the proposers. Why might this happen? It appears the receiver of the offer gets almost no satisfaction from the pittance of an offering. Instead the receiver gets joy from rejecting the offer and punishing. The lesson? The children are playing a larger game. The ultimatum game is not wrong, per se, but it is obvious the children are not playing it. They are instead playing the game of “I want candy, but if you are not fair I will be more than happy to punish you.” And it is the very fact that they change the game that alters the outcome.

Repeated play changes the game

Repeated games can have very different outcomes from one-shot games. In a one-shot ultimatum, one would fully expect low offers to be accepted. But not so in a repeated game. In this experiment, the children likely do better by rejecting the offer in the first game and getting an even split in the second (netting say 5 chips) than they would have been by accepting two sets of low offers (netting say 2 chips).

Fairness is very important in division

It is not always easy to say what is fair. But it is often the case we know what is unfair. Fair division is a topic that comes up time and again, in splitting bills, determining homeowner fees, and even in eating peanut butter and jelly sandwiches.

The children are obviously concerned with a fair split which affects the outcome and prevents the offerer from making unreasonable ultimatums.

Discussion questions

1. How might the game change if the children played with other foods like vegetables or slices of pizza? Or money?

2. Do you think the children knew the game would be repeated?

3. Would the outcome be different if the children switched partners between the first and second games?

4. How would the game be different if the recipient could give a counter-offer? [this is sometimes called the double ultimatum game]

5. Comment on how this experiment is similar to the song “Before He Cheats” by Carrie Underwood [video on youtube]

6. Offers to the ultimatum game vary worldwide. Summarize some of the differences as summarized in Tom Siegfried’s article “Social Thermometers” in The Dallas Morning News [link to article – .doc file]