This game was invented in 1970 by economic theorist Werner Güth when he was studying at the University of Münster). In the decades since, it has become a mainstay of game theory scholarship.
An asset in the form of a small amount of money, a pie, or other divisible and semi-desirable object. The asset should be provided by a third party (i.e., not either of the game’s players). This is to ensure that the players do not feel that one of them has an inherently greater claim of ownership.
- One player is randomly selected to propose how to divide the asset between himself and the other player. The player is free to allocate as much of the asset to himself as he wishes.
- The player who did not divide the money decides whether to accept or reject the division.
- If the division is accepted, both players receive and can keep their share of the asset. If the division is rejected, neither player receives a share of the asset.