The Ultimatum game has shown us that, in contradiction with the Nash equilibrium, offers are rejected if they are deemed too low. This experiment was done in the USA, Yugoslavia, Israel and Japan where most proposer offered around 40-50% of the “pie”. It Is interesting to note that offers were significantly low in Israel and Japan than the USA and Yugoslavia.
But experiments done by anthropologists in primitive cultures in Africa, the Amazons, Papua New Guinea, Indonesia and Mongolia suggests behaviours as the Nash equilibrium predicted. As the paper linked below says: “In most cases, offers were very low (about $1.50 out of $10) and offers were accepted practically every time.”
As Romans book shows, we can find a positive correlation between market integration and generosity but it is unclear if this is a direct effect or some third unobserved variable is affecting both. Other people point out at a fairness-based explanation. This might explain the difference the between USA and Yugoslavia with Japan and Israel. Fairness is a strong value in western society culture while not so much in others. It might be that in primitive cultures there is no concept of fairness or their definition of fairness is radically different from the western’s world. A weakness of this theory is that it does not explain why such aversion to inequality exists.
Another explanation is the risk aversion. In the second link, we can find a new approach using a probabilistic decision-making model. In this model proposers who do a more generous offer have more chances to get a deal accepted. By increasing the variance of receivers, they tend to be more unpredictable. We can interpret it as the wealth of the receiver (my interpretation), so he will not care much about rejecting lows offers. Instead, the proposers are going to bid higher offers to diminish the risk of rejection. The simulation shows that when there is more variance, at the end, the “pie” will be distributed in more equally proportions (check figure 2 of the second link). This shows how wealth might be an important factor when explaining the Ultimatum Game behaviours. As primitive cultures live in poor conditions they will not risk the chance to get more money, even if it is a low amount.
To conclude, these experiments were done in 1991 when Japan and Israel might not have caught up yet with the USA and the other developed countries making them more risk-averse. Still, Yugoslavia was a poorer country than Japan and Israel and their people behaviour is more similar to the USA. Did people from Yugoslavia have less risk-averse because their needs were satisfied? Or people from Yugoslavia had a strong fairness based ideology? Or because they had a strong market integration? All these theories might play a part in explaining such behaviours, but the question remains unanswered. Still, with no doubt, we are getting closer to the truth.