The Rational Ultimatum
A proposer offers a split of $100 in whole dollars to a responder, who accepts (the split happens) or rejects (both get $0). Both players are rational and care only about money. In the subgame perfect equilibrium where the responder accepts only strictly positive offers, how many dollars does the proposer offer?
Related problems & prerequisites
Worth solving first
- Grim Trigger 5.0/10
- Stackelberg Leadership 5.0/10
Source: The ultimatum game, introduced by Werner Guth, Rolf Schmittberger and Bernd Schwarze (1982). Statement written for AxiomIQ.