Game Theory (17)-Ultimatum and Bargaining
This lecture can basically be divided into two parts. First, let’s discuss the ultimatum.
Ultimatum
In the course, a game is described. Assuming that there is a dollar for two people, the first person can choose how to allocate the dollar. The second person can choose to accept or not. If you accept, then the 1 dollar will be distributed according to the distribution plan given by the first person, and if you object, both people will get nothing.
Intuitively, based on reverse reasoning, the first person only needs to allocate the second person infinitely close to zero to almost monopolize the $1. Because after the first person is allocated, if the second person chooses to refuse, his benefit will be zero; and acceptance can at least get that insignificant value, which is better than nothing. But in reality, people’s choices don’t seem to focus only on value, they also care about self-esteem, fairness, or other intangible things. So usually a very excessive allocation will result in a situation where both sides suffer.
However, these intangible things do not seem to be an evolutionary error, making people no longer rational and subordinate to sensibility, giving up the benefits already obtained. The reason is that we do not only conduct such a transaction once. If the number of transactions increases, a better strategy is to let others know that we are a person with strong self-esteem. Then the bidding order seems to be reversed. The first person faces the situation of the second person. Assuming that if the first person knows that the second person can only accept offers greater than $0.6, then the best choice for the first person Give the other party 0.6 dollars, otherwise you will have nothing if you refuse.
I have to sigh the magic of evolution, every result seems to have its reason. And this also leads to the foundation of game theory-information asymmetry. The key to the game is to understand as much as possible about the opponent's situation (such as how strong his self-esteem is, the direct point is how much distribution he can accept), and to confuse the opponent as much as possible (make the opponent feel that his self-esteem is strong, you I will refuse if you don't give me $0.9).
It is also mentioned in the course that even in the dictator game-the second person has no right to refuse and must accept whatever is given, and the first person will still give certain concessions. I