There are many little things that make me love my job as an academic and (almost) forget about the big pressures it comes with. One of them is the possibility to teach subjects I find interesting and intellectually stimulating, such as Economic Analysis of Law, and to engage with students in interactive seminars. In a recent cycle of such seminars, I got my students (all of them 2nd and 3rd year undergraduates) to play a variant of the ultimatum game. It went as follows.
I told them to pair up and decide who would play first and who would go second. I then explained my version of the game. I (symbolically only) offered them £10 to play with. If they reached an agreement on how to split them, they would (theoretically) keep the money and split it the way they decided. If they disagreed on the split, I would keep the money. When they "played", they had to offer their partner a split of the £10 bill (going anywhere in the range between £0.01 and £10) and the partner could only accept or reject the split. They could not negotiate. In order to try to avoid issues of reciprocation or retaliation, I got them to write down separately and confidentially their offer and asking values.
The overall results of the game were interesting. We had 76 games in total (38 pairs of players) and 58 of those were successful (ie a 76% success rate). Only 18 games (24%) resulted in no agreement on a split of the £10 bill.
It is also interesting to look at the descriptive statistics of the game. Most players opted to offer a £5/£5 split and most of them also expected to be offered a £5/£5 split. This is not an uncommon practical result of the game, but it is certainly not what one would expect from a theoretical perspective.
The game led to very interesting conversations about rationality / irrationality / utility / happiness / fairness / the usefulness of law and economics 1.0 and the promises of law and economics 2.0, and a few other things. In short, a highly rewarding teaching experience. Worth sharing (I hope).