@CTM
I think you need to chill the fuck out- what's with your panic about the panicky bitches of Wall Street. Your panicked involvement in this nasty cycle of panic-strewn afterbirthing is enough to make me sick from eating my own fecal-laden hair, which would be a bitch to swallow and nearly possible to digest, therefore leaving me choking and clogged, unavailable to hear the panic in your voice when you are screaming at me to put down the goddamn knife. Fuck you and your bullshit attitude towards life and the liberties that each shithead trader has and will always have, you commie bastard.

I just thought that I'd point out that rejecting the $100/$900 split isn't actually irrational if its possible to renegotiate.
This also goes to show that unilateral power is bad, in either case, because it means the most 'rational' decision is the one that screws the other guy the most. (For instance, if we can renegotiate forever, the veto-holder can just veto until he's offered the $900/$100 split the other way.)
Our disgust reflex for unfairness works to discourage this type of behavior, since the person making the split in this case knows that he might get a rejection if he's too unfair and likewise end up with nothing. If he assumed his target was 'rational' there would be no reason not to propose the $100/$900 split.

jfljoe --
Aw, shucks, yer such a sweet-heart
::blush::
Now go over and stand in the corner with the pointy hat on and try to be a good boy; the adults are talking.
-- CTM

It's unfortunate that CTM can't see past the end of her own survivalist nose to see that her panic is also a contributing factor to this whole mess. Airing your worries about the panic is indeed a pathway to perpetuation, and, although secondary, it is itself panic. Maybe it is you who should be the wearer of the pointy hat. And Ross, why would you bring rationality into this discussion? The rational thing to do in quicksand is to stay calm, but what percentage of the population actually would? Irrational people rule the world, and thus, are quite awesome.

jfljoe, CTM --
You kids should play nice. The financial crisis facing our nation is dire indeed, with millions of starving American familes now facing job losses, housing forclosures and repossession of their ATV's and RV's from their driveways, you should consider the less fortunate people who can't afford the internet or newspapers that you people choose to pollute with your disgusting words.
FUCK YOU ALL!!!
--beezettha

As Ross points out, rejecting the 'unfair' split IS rational behavior. The problem is that the economic model fails to include the value of socieal consequences.

In other words, a rational player can decide that saying "Fuck you" to an offer of a 90/10 split is worth the opportunity cost of 10%. As the opportunity cost of rejecting the offer increases - 20%, 30%, etc. - we expect to see a shift in behavior towards accepting the offer, which is exactly what happens.

Simply improve your model, and rationality reappears.