Wow, that game seems to be surprisingly common! It was played on my school in Munich, Germany.

The rules were: if you look through the loop, you are punched in the upper arm. The puncher has to draw a bull's eye first, then punch, then the recipient must say "thank you" and the puncher must reply "you're welcome" (of course in German, i.e. bitte, danke). Any deviation from the rules is punished by a punch, to be administered in accordance with aforementioned ceremony.

Where did you grow up?