This lecture explores other solutions to the ultimatum game. The materials presented here are pretty technical. If you don’t have a bargaining background or would prefer skipping over some math, you can go straight to the next lecture without a problem. But if you are watching this course because you are taking a class on bargaining theory, you definitely need to go through this.
Takeaway Points
- When the proposer demands the entire surplus, the receiver is indifferent between accepting and rejecting. As such, she can optimally choose either.
- Consequently, there are solutions to the ultimatum game that result in the receiver receiving none of the surplus.
