A four-year-old girl sees three biscuits divided between a stuffed crocodile and a teddy bear. The crocodile gets two; the bear one. “Is that fair?” asks the experimenter. The girl solemnly judges that it is not. “How about now?” asks the experimenter, breaking the bear’s single biscuit in half. The girl cheers up: “Oh yes, now it’s fair. They both have two.” Strangely, children feel very strongly about fairness, even when they scarcely understand it.
Adults care about fairness too – but how much? One way to find out is by using the ultimatum game, created by economist Werner Guth. Jack is given a pile of money and proposes how it should be divided with Jill. Jill can accept Jack’s “ultimatum”, otherwise the deal is off, and neither gets anything.