Purpose – The purpose of this short paper is to provide an alternative method to explain the reason why the outcome of the ultimatum game based on the well-known self-interest model is not feasible in real life. Design/methodology/approach – Contrary to traditional models which treat fairness as a variable of the utility function, the paper takes fairness as a constraint to the utility function. The problem is solved through the standard incentive theory and bargaining theory. Findings – It was found that fairness constraints play an important role in determining the eventual outcome of the ultimatum game. Research limitations/implications – The paper's approach may set up a useful framework for incorporating fairness into economics, and bridge the gaps between the fairness approach and the standard incentive theory and bargaining theory. Practical implications – When tackling the problem of distribution based on fairness, the paper shows that the cultural background and special situation should be taken seriously. Originality/value – In this paper, the concept of the fairness constraint is introduced into a formal framework.
Constraint handling, Economics, Game theory, Utility theory
In order to set up a list of libraries that you have access to,
you must first login
or sign up.
Then set up a personal list of libraries from your profile page by
clicking on your user name at the top right of any screen.