The Cost of Ultimatum And Who Actually Wins
Most of us think negotiations should lead to a win-win. But sometimes, people would rather ruin everything than let you get a bigger share.
That’s what the Ultimatum Game shows us.
When someone gives an ultimatum, we often think they want fairness. But research shows it’s often about spite: “I’ll lose, but I’ll make sure you lose more.”
A study by Oosterbeek, Sloof, & van de Kuilen (2004) found that while most people offer about 40% of the pie, 16% of offers get rejected. Think about that: people choose to walk away with $0 just to punish a proposer who offered “only” 20%.
Digging deeper, you may occasionally meet another type of person. They are more likely to make low-ball offers as proposers and reject low offers as responders. They aren’t looking for a “fair” margin; they operate on a short-term hit of competitive dominance. There’s no win-win in their universe, only spite. And when you don’t get what you want, this is their win.
Next time you’re at the table, ask yourself: Am I negotiating with a rational actor, or someone who values my loss more than their own gain?
Yours truly,
Irina