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> In theory, the first player only needs to split $999999/$1. $1 is better than nothing for the second player, so if he was perfectly selfish and rational, he would accept the offer.

An important point is that this is only true if there can only be one offer and no chance of re-negotiation. Player 2 knows that their cooperation has value, and has negotiating power because of it.

The point is that the seond player has negotiation power whether they get a chance to make a counter-offer, or not.

The first player must try to guess what the second player will consider a fair split, otherwise they (the first player) get nothing.

In that sense the rational thing is to offer half the money, which is really the fairest possible split. Anything less risks the second player flipping the bird and watching the first player lose a fortune, at the cost of $1 to themselves (the second player, and in the case of the proposed as "rational" choice).

That explains why player 1 should not offer only $1, but it doesn't explain why player 2 would not take $1 if offered. If there is no chance of renegotiation, and you already got an offer of free money, it is irrational to not take the money. The only reason player 2 would do so is if: (1) this is a regularly occuring event and they want to help future player 2s, or (2) they like the emotional response of spiting player 1.

There is also some game theory going on there. The second player is also offering the first an ultimatum. In theory, if the second player says they would only corporate for a 1/99 split, the second player should accept that deal (assuming the 1% is still greater then the effort that the first player needs to put in).

In essence, there is a range of splits that is mutually beneficial, and it is a negotiation to decide which of those splits to take. As anyone who regularly negotiates knows, a key asset in negotiations is the credible ability to walk away. If people have multiple negotiations, then the ones who are willing to let slightly profitable deals fall through will often do better in net because the deals they do make will be even more profitable then they would otherwise be.

Much of economics can be seen through this lenses. For instance, monopolies can be thought of as the monopoly holder playing an ultimatum game with all of the consumers. Since the monopoly holder has a much higher ability to walk away from a deal they are able to force the trade at a price point that allows them to capture more of the net benefit.

>>>So it show that we are not completely rational and selfish here.

Does it? Accepting $1 might be a good strategy if this game only ever comes up once and no one can learn from it, but that's not the world we live in. If all the "second players" in the world don't accept anything below 30%, guess what, we end up much better off in the long run.

You omit the rational knowledge of knowing the other party will receive more than you, or nothing if you do not participate. The rational action is to hold out for a larger split, with the limit of that being you receive the majority.

No. The politicians benefit from the majority of people hating who acted, and punish those were lucky enough to have the talent to use money more efficient, and in turn the common wellness dropped because of the overall efficiency dropped.

In “The Secret of Our Success”, Joseph Heinrich mentions his research on ultimatum game, where he found that this attitude of rejecting unfair splits is not culturally uniform: for example, western people are much more likely to reject it than some South American natives that he studied.

The reason no one would accept the 999999/1 split is because it is a terrible choice from an evolutionary perspective.

You're getting pretty much nothing while your genetic competitor gets a huge advantage. This is not rational. Natural selection would cause the genome of people who accept this split to be less likely to survive.

Accepting only even splits helps select for cooperation. If your neighbors are more likely to work with, share, and help you and your children, your DNA will be more likely to survive.

>> So it show that we are not completely rational and selfish here.

Sure we are. "Give me half the money, or you get none". That's a perfectly rational plan to force the other party to maximise your reward.

The risk is that the second player gets nothing, sure, but that's the ideal of profitable financial strategies, no? You take risks, you maximise your gains.

Me? I'd ask for 99.9999% and watch the first player squirm and sweat. Come on chap, show me how you rationally maximise your gains!

Splitting in any other way than 50:50 would change the power dynamic. The richer would have some leverage over the poor one.

The poor one would would obviously see this as unfair.

I suggest retrying the experiment with non-divisible outcomes. For example couches, TVs and so on.

You have to control for starvation though. Don't go asking millenials to sign off on someone else getting their own house or similar outcomes they have been primed to envy.

I would be mildly interested in the results then.

Not sure if accepting $1 is perfectly rational. Unless you ignore the fact that other player is a human. Otherwise you know, that if they can win more and if you do not cooperate they will pass much bigger opportunity you can very well assume that they will be willing to pay way more than just one $1. Supply and demand.

You need to adjust the ultimatum game to make itsimilar to the examples given in the article. Your choices are actually:

1. Do nothing. 2. Play the original ultimatum game.

The question now is: Is 1 more ethical than 2?