Ultimate Game

The basic rules of the Ultimatum Game are simple. One person is given a stack of cash, and told to divide it between themselves and a second party. That second party is then given the chance to accept or reject the offer; if it's rejected, neither of them get any money. Clearly, any of this free money should be better than nothing, so under assumptions of strictly rational behavior, you might expect all offers to be accepted.
 
They're not. Things in the neighborhood of a 50/50 split are accepted, but as the proportions shift to where the person issuing the ultimatum tries to keep seventy percent of the total, rejections increase. By the time they hit an 80/20 split, nearly 70 percent of the offers are rejected, even though that 20 percent of the total cash would leave the recipient better off than where they started.
 
It's still possible to interpret this behavior as being rational within a social context. A lot of human behavior, and that of other primates, seems to be focused on ensuring cooperative behavior within small groups. The rejection of offers within the Ultimatum Game can be viewed as a form of punishment for unfair behavior. In that light, the rejection may make sense to the degree that the immediate loss of money provides a long-term incentive for fair and cooperative behavior within a group. Rational economic behavior is restored.
 
The new paper pretty much blows that explanation out of the water by testing individuals using a couple of variations of the Ultimatum Game. In the first, which the authors term "the Impunity Game," the person making the offer gets their share of the cash regardless of whether the offer is accepted or not. In this game, the only consequence is the potential for guilt caused by the knowledge that an offer was rejected. Rejection rates do drop, but they remain substantial—offers of an 80/20 split got rejected over 40 percent of the time (down from around 70 percent) despite the lack of real economic consequences.
 
To really nail things down, the authors conducted tests of a Private Impunity Game, in which the person who made the offer wasn't even informed of whether it was rejected or not—they simply walked away with their share of the cash. Here, even the nebulous hope that the person making the offer would feel pangs of guilt from its rejection was removed. Rejection rates were essentially unchanged. People keep rejecting offers they perceived as unfair, even if, like the proverbial tree in the forest, no one will hear their rejection.
 
In another hint of the nature of this response, the authors describe how a similar study was performed in which the Impunity Game was explained to participants as a series of if/then statements: "if A chooses X and B chooses Y, then A receives $i and B receives $j." Here, when subjects are forced to reason through the conditions to figure out that their rejections didn't cause any sort of financial punishment on the ones making the offer, rates or rejection were about the same as they are in the Ultimatum Game. This suggests that people can't even be bothered to perform a rational analysis when money is on the line, much less engage in rational actions.