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Imagine that you are sitting next to a complete stranger who has been given £10 to share between the two of you. He must choose how much to keep for himself and how much to give to you.

He can be as selfish or as generous as he likes, with one proviso: if you refuse his offer, neither of you gets any money at all. What would it take for you to turn him down?

According to classical economics, people are supposed to be rational. But in the Ultimatum Game, they're not.

Indeed, if the sum is less than £2.50, four out of five of us tell the selfish so-and-so to get lost.

Come to think of it, so would I. Why is this? Neuroeconomists say, it's all in the brain.

Posted by edelfenbein at October 14, 2006 6:29 AM