Mrs. Xiaodong Liu, Dr. Pingnan Ruan

School of Economic and Management, Beijing University of Technology, China

This paper gives an explanation of the ignored but necessary ethical concerns in classical game theory, which is individual benefit-oriented. We prove that ethics does affect the game process and result, and that evolution of ethics has been achieved in intricate games according to collective rationality. Especially, we find in experimental economics approach of Ultimatum Game that common sense of fairness goes beyond the Nash Equilibrium and guides people behave ethically. Based on the above discussion, we suggest two ways to involve ethics in traditional quantity-based models: (1) by adding utility value on the original benefit value, which is simple but limited, and (2) by separating quantitative value and qualitative value to meet both optimal and appropriate solution, which seems closer to real human behavior, but intricate to implement also.