Ultimatum game and the bailout

Stephen Dubner compares the public opposition and resultant Congressional rejection of the $700 bn bailout package to the ultimatum game.

The ultimatum game is an experimental economics game in which two players interact to decide how to divide a sum of money that is given to them. The first player proposes how to divide the sum between themselves, and the second player can either accept or reject this proposal. If the second player rejects, neither player receives anything. If the second player accepts, the money is split according to the proposal. The game is played only once, and anonymously, so that reciprocation is not an issue.

The Congress perceives the public as feeling that under the bailout proposed, Wall Street will benefit to the extent of $90, whereas they will get a mere $10. The perception of sheer inequity and unfairness of this proposal, despite being mutually beneficial, is an important reason for the Congressional rejection.