The ultimatum game is a simple experiment where two players divide a sum of money. The proposer offers a portion to the responder, who can accept or reject the offer. Unlike predictions from game theory, which assume rational self-interest, responders often reject low offers, suggesting that fairness and social norms play a role. This column explores these anomalies and their implications for economic theory. The ultimatum game has been studied extensively, revealing that offers typically range from 30-40% of the total, with rejections of low offers common. Researchers have investigated whether these results are due to the low stakes in laboratory settings or other factors. Experiments with higher stakes, such as $100, showed similar results, indicating that the behavior is robust and not merely an artifact of small stakes. Cultural differences were also examined, with similar patterns observed across different countries, though some variations were noted. The role of information in the ultimatum game was explored, showing that responders' rejection of low offers may be influenced by their perception of fairness. Experiments manipulating information revealed that responders are more likely to reject offers they perceive as unfair, even if the offer is objectively low. This suggests that fairness is a key factor in decision-making. The dictator game, where the allocator decides how to split the money without the recipient's input, also shows that allocators often share money, indicating a sense of fairness. However, this behavior can be influenced by social distance and context. Experiments showed that when allocators feel more connected to the recipient, they are more likely to share. Theoretical models have been developed to explain these behaviors. Bolton's model incorporates social comparison, while Rabin's model emphasizes fairness and punishment of unfair behavior. These models suggest that fairness and social norms are important in economic decision-making. The column concludes that the ultimatum and dictator games highlight the importance of social norms and fairness in economic behavior, rather than purely self-interested motives. The results suggest that people are influenced by social norms and the context of interactions, rather than just economic incentives. The study of these anomalies helps refine economic theory and provides insights into human behavior.The ultimatum game is a simple experiment where two players divide a sum of money. The proposer offers a portion to the responder, who can accept or reject the offer. Unlike predictions from game theory, which assume rational self-interest, responders often reject low offers, suggesting that fairness and social norms play a role. This column explores these anomalies and their implications for economic theory. The ultimatum game has been studied extensively, revealing that offers typically range from 30-40% of the total, with rejections of low offers common. Researchers have investigated whether these results are due to the low stakes in laboratory settings or other factors. Experiments with higher stakes, such as $100, showed similar results, indicating that the behavior is robust and not merely an artifact of small stakes. Cultural differences were also examined, with similar patterns observed across different countries, though some variations were noted. The role of information in the ultimatum game was explored, showing that responders' rejection of low offers may be influenced by their perception of fairness. Experiments manipulating information revealed that responders are more likely to reject offers they perceive as unfair, even if the offer is objectively low. This suggests that fairness is a key factor in decision-making. The dictator game, where the allocator decides how to split the money without the recipient's input, also shows that allocators often share money, indicating a sense of fairness. However, this behavior can be influenced by social distance and context. Experiments showed that when allocators feel more connected to the recipient, they are more likely to share. Theoretical models have been developed to explain these behaviors. Bolton's model incorporates social comparison, while Rabin's model emphasizes fairness and punishment of unfair behavior. These models suggest that fairness and social norms are important in economic decision-making. The column concludes that the ultimatum and dictator games highlight the importance of social norms and fairness in economic behavior, rather than purely self-interested motives. The results suggest that people are influenced by social norms and the context of interactions, rather than just economic incentives. The study of these anomalies helps refine economic theory and provides insights into human behavior.