Game Theory 101: Double Ultimatum

What happens when you can make a counteroffer when you don't like someone else's proposal? William Spaniel solves such a game using backward induction.

Category:

Sports

Tags:

• Game
• Theory
• Ultimatum
• Subgame
• Perfection
• Perfect
• Nash
• Equilibrium
• Backward
• Induction

[inf0phreak]

So this analysis confirms our intuition that whoever has the ability to pose the last ultimatum gets to set the rules, right?

Of course the analysis doesn't take into account things such as the players having a utility function that values 'unfairness' negatively. In that case, "we both get 0 cookies" could be considered a better outcome than "more for you than for me". But that would be a different game altogether.

[JimBobJenkins]

Correct on both accounts. I think I laid out the rules for the payoff function in the last video: more cookies are better for less, and you only care about what the other one gets given you have secured your own payoff. (That is, if I get 5 cookies, I would prefer you get 0 to 1 to .2 to .. to 7.)

How this works in experimental game theory is pretty interesting. Maybe I will get to that eventually.

[njmickel4]

Rug rats?

[hagu44]

Lol these are some selfish kids



[flyingbeagles]

So does everything change when Players think it rational to punish the other even though it would punish themselves too?

[bobbygnosis]

"Rational self interest."

O' shades of Ayn Rand.

[kuha5ster]

wow...u must really like the rugrats..lol...but i like the logic