Ultimatum game

[SA125]

Here's a real life example of this game. Prior to the explosion of the cell phone, my cousin had a nice little side business of pay phones. His deal was simple. He went to owners of businesses, many of them gas stations, and offered the owner the following deal.

My cousin would incur all the costs of placing a phone on his property and assume all the maintenance and repair costs. At the end of the month, the line charge bill would be paid to the phone company and the profits split 65-35 for my cousin.

What typically happened was owners who were born here and raised as Americans replied "Why should you get more than me? I'm being screwed. No deal." Owners who had immigrated here looked at him in astonishment and asked "Let me get this straight. All I have to do is let you put a phone on my property, at no cost to me, and you'll give me 35% of the profits every month?" When my cousin assured him that's the deal the immigrant typicaaly replied "I'm in and, if you want, put a second one in too."

How this or anything like it applies to poker, I have no idea. But it makes good food for thought.

[jkwraw]

Your example is right on the money (so to speak).

I enjoyed the article. The sociological aspects of this game fascinate me. After reading the article I found that I would probably turn down 35% also & it doesn't make any sense for me to do so.

I also have some particular players in mind that I am going to try the "crazy dictator" on.

[SumZero]

[ QUOTE ]
How this or anything like it applies to poker, I have no idea. But it makes good food for thought.

[/ QUOTE ]

It comes up all the time in bubble situations (especially common in S&G). For instance using ICM there are many examples of how it can be right to push any two cards from the small blind, assuming the BB is playing rationally to maximize his EV, because he'll be forced to fold any two cards (because of a super short stack in LP). But in reality even though calling is -EV for the BB (and if the BB makes these -EV calls pushing is -EV for you) the BB will often make these calls. Sometimes it is silmply explainable by saying the BB doesn't understand bubbles and ICM analysis. But some of the time it is similar to the ultimatum game where the BB might be thinking something like: "If I continue to let you bully me then I get $0 and you get $1000, if I call then I lose $100 and you lose $500 and that's a fairer split than you get everything I get nothing". In otherwords the social benefit they get by calling and punishing your steal is worth it to them. Also when you are the BB if you threaten to make these calls, and even sometimes do (if the players take notes), then you are engaging in the crazy dictator strategy when you make these -EV BB calls as you are letting the SB know they can't abuse you like this.

[trojanrabbit]

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if you threaten to make these calls, and even sometimes do (if the players take notes), then you are engaging in the crazy dictator strategy when you make these -EV BB calls as you are letting the SB know they can't abuse you like this.

[/ QUOTE ]

I think I've heard something like this before from Chris Ferguson. Imagine that the chip leader at your table is raising all the time and running over the table. You will be put in a lot of -EV situations hand after hand after hand. However, there are several hands where it's only slightly -EV to call. Everyone at the table should start calling with those slight -EV hands. That way the chip leader lets up from his bullying and everyone at the table gains from not having to be under the constant pressure.

Tysen

[Jay P McCauley]

[ QUOTE ]
I think I've heard something like this before from Chris Ferguson. Imagine that the chip leader at your table is raising all the time and running over the table. You will be put in a lot of -EV situations hand after hand after hand. However, there are several hands where it's only slightly -EV to call. Everyone at the table should start calling with those slight -EV hands. That way the chip leader lets up from his bullying and everyone at the table gains from not having to be under the constant pressure.

[/ QUOTE ]

This might imply a social dilemma along the lines of the "Tragedy of the Commons" (see: wikipedia) whereby everyone is better off if SOMEONE is always willing to call the aggressive big stack with a slighly -EV hand, but it is nevertheless irrational for any particular individual to do so. This is because

(1) if others are calling with hands of strength x, then you do not need to because the goal of putting the big stack in a -EV spot will be accomplished by others. And,

(2) if others are NOT calling with hands of strength x, then you should also not call since it is -EV and will not accomplish your goal anyway.

When everyone considers (1) and (2) above, they do (or, at least, should) elect not to call, even though it would be rational for them to collectively take this action. This might partly account for why bullying on the bubble with a big stack is so often effective.

[trojanrabbit]

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but it is nevertheless irrational for any particular individual to do so.

[/ QUOTE ]

Exactly. I described in one of my previous articles a bubble situation where you are in the BB and it is correct for the SB to push with any two cards because you have to fold so often. I said to do your best to convince the SB (before he pushes) that you are going to be loose and call him down no matter what you’ve got. Tell him you’re sick of his bullying and you’re going to put an end to it right now. You might be able to convince him not to push every hand. But once he pushes those chips in and can’t take them back, there’s nothing left for you to do but shut up and fold.

Tysen

[Mike]

This happens to me at the limit table. When I win big fast, Other players will start to simply fold when I bet. I thought it was irrational, but thanks to the article I now understand.

On a larger scale, isn't this what we do to each other. Upper class suburbia verses ghetto, SUV verses beater, USA verses Ethiopia (perhaps Etheopia is a bad choice?).

At any rate, I am glad this article was posted.

[jjacky]

the short stacks play a "prisoners dilemma" game. this (http://en.wikipedia.org/wiki/Prisoner's_dilemma) is a link to a wikipedia article about it.