Mon 15 Sep 2008
I recently read about a really interesting experiment called the ultimatum game. It goes like this: person A is given 10 one-dollar bills and can offer person B any number of them. B can then either accept or reject A’s offer. If B accepts, A and B get what was offered. If on the other hand B turns the offer down, each person gets nothing.
What makes this experiment so interesting? Well, if human beings really were ‘rationally self-interested invidividuals’- the homines economici of classical economic theory- then the game should go like this: A should only offer B 1 dollar and hang on to the rest. And B should accept A’s offer, since getting 1 dollar is better than nothing.
So is that what actually happens? No, not at all. Practice has shown that most A players offer B close to half the total. And B players who are offered only one or two dollars generally turn the offer down. Amazing, isn’t it? Even in a simple game like the ultimatum game, it seems that people are not primarily motivated by greed and self-interest but rather by values like ‘fairness’. Maybe it’s time at last to say goodbye to the homo economicus model and welcome in homo ethicus.
September 17th, 2008 at 10:17 am
My dear Frank, I respectfully disagree. If I were Person A, I would begrudgingly award Person B at the very least 5 dollars, not out of benevolence or fairness, but solely to increase my chances of Person B accepting the money, therefore increasing my own chances of being rewarded with money. Now of course only hypothetically am I Person A, but I unfortunately feel that many people would employ the logic above when faced with this decision.
September 27th, 2008 at 5:28 pm
Are you sure?
September 28th, 2008 at 5:34 pm
I will put this as “my recommendation” in my blog. Thanks. Pak Tam
September 30th, 2008 at 7:53 am
Thanks for the interesting point, Dawn. You might be right- but it supposes that most A People would realize that B People tend to reject stingy offers. I, for one, wouldn’t have guessed that.
October 3rd, 2008 at 1:23 am
It all sounds very nice but in my opinion history has shown, that humans act solely out of greed and selfishness. When it comes to politics, be it left or right voters, they all vote to better their own chances and economic gain in society. I have rarely met a truly unselfish voter. That why the majority of young(poor) students vote for social parties and as they grow older(and richer) they vote konservatively. In Your example I will argue that both A and B are trying to optimize their own payout. Human are selfish, but luckily, there are exeptions. JHK
October 3rd, 2008 at 11:20 am
Frank, if you are indeed writing a novel, I insist that you allow me to read it. And your picture? Exactly as I remember you. How in the world did you manage to NOT age a bit???
October 4th, 2008 at 5:15 am
I’ve heard some goody things about this blog. The content has really been useful a great balance of text and pictures.
January 4th, 2009 at 1:43 am
Well, there’s smart greedy (tries to assess highest chance of making the most amount of money, including in the long run) and dumb greedy (I want riches now now now). The dangerous ones are the ones that are a bit of both, i.e. those who choose to screw millions of people (customers, taxpayers) to make many bucks, but that game can’t last forever. ‘Selfless’ people are just the ones that know that what goes around comes around. It’s just one smart way to be greedy, by reducing chance of loss to zero, and increasing non-risk assets (people who like you. HUGE asset. Indirectly, you would get a variable amount of many people’s resources at your disposal).