The Limits of the Market: The Pendulum Between Government and Market
by Paul de Grauwe and Anna Asbury · 12 Mar 2017
have become rich through theft, betrayal, or corruption. The sense of fairness seems to be universal. This has been confirmed in many experiments involving the ultimatum game, which works as follows. John receives one hundred pounds. He has to share this sum with Peter. John can choose to give Peter any sum
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to one pound because this is the only way they can punish the other player, satisfying their sense of fairness. The many experiments with the ultimatum game suggest that the acceptable distribution is around /. There is some variation, but the results indicate that a sense of fairness wins out over pure profit
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, , Tocqueville, A. de too big to fail banks top-down control mechanisms top managers/CEOs and winner-takesall – transaction costs trickle-down theory Tuymans, L. ultimatum game unemployment , , , , – United Kingdom , Bank of England , , , capital, share of belonging to top % and top % t debt issuance in own currency government control over currency government
Luxury Fever: Why Money Fails to Satisfy in an Era of Excess
by Robert H. Frank · 15 Jan 1999 · 416pp · 112,159 words
. “Veblen Effects in a Theory of Conspicuous Consumption,” American Economic Review 86, June 1996: 349-73. Ball, Sheryl, and Catherine Eckel. “Status and Discrimination in Ultimatum Games: Stars Upon Thars,” Virginia Polytechnic Institute Department of Economics, mimeographed, 1994. Ball, Sheryl; Catherine Eckel; Philip Grossman; and William Zame . “Status in Markets,” Department of
Priceless: The Myth of Fair Value (And How to Take Advantage of It)
by William Poundstone · 1 Jan 2010 · 519pp · 104,396 words
Cult of Rationality 13 Kahneman and Tversky 14 Heuristics and Biases 15 The Devil’s Greatest Trick 16 Prospect Theory 17 Rules of Fairness 18 Ultimatum Game 19 The Vanishing Altruist 20 Pittsburgh Is Not a Culture 21 Attacking Heuristics 22 Deal or No Deal 23 Prices on the Planet Algon Part
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a degree that it judged free markets unfair—for free markets are as likely to work against one’s selfish interests as for them. Eighteen Ultimatum Game Imagine a postapocalyptic future in which nothing survives of American culture except some Farrelly brothers movies. That is virtually what happened with the earliest Roman
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customary social, legal, financial, and ethical entitlements, the game lays bare the issue of inequality, something that all societies struggle with. In a way, the ultimatum game is the monetary version of S. S. Stevens’s classroom demonstration that black is white. The value of money depends on context and contrast. How
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, and others who find their only bargaining chip to be a self-destructive veto. In a real sense, we all play the ultimatum game. “We were very pleased with the ultimatum game,” Kahneman said. “We thought it was a very good idea—we didn’t realize how good it was. Then, just as the
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with 1,000 deutsche marks in his bag, a grant for running economic experiments. He and colleagues Rolf Schmittberger and Bernd Schwarze did the first ultimatum game experiments during the 1977–78 academic year. Güth said it was never his intention to demonstrate that humans don’t behave as economists assumed. “That
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the other. University of Cologne students were not especially good at finding the optimal split. So Güth tried the “easy game,” now known as the ultimatum game. In the first experiment, forty-two graduate economics students were paired off. One person in each pair split a variable cash prize that ranged from
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remembered “being quite crestfallen” when he learned of the Güth paper. “I would have been even more depressed if I had known how important the ultimatum game would eventually become.” He, Knetsch, and Thaler didn’t revise their paper, aside from mentioning Güth and adding him to the references. Fortunately, they had
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that “the theory can stand for hundreds of years, unchallenged, until someone says, ‘look at the emperor, no clothes.’ The counterexample was trivial.” “Is the Ultimatum Game the Ultimate Experiment?” asked the title of a 2007 paper by Yoram Halevy and Michael Peters. They were referring only half-facetiously to the academic
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milestone in establishing the importance of psychology in even simple economic decisions. “Something special had to happen for economists to pay attention,” he explained. “The ultimatum game had that feature.” One reason economists paid attention is the evident parallels to price setting. The $10 can represent the potential profit (“surplus”) on a
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door . . .” Each side may know the other isn’t serious. The crux of negotiation is how to deal with tough bargainers making lopsided demands. The ultimatum game presents, in concentrated form, the truly difficult part of negotiation. Where one or more hard-line bargainers are involved, there must come a moment of
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he was convicted of influence peddling, resulting in a $500,000 fine and a two-year suspended sentence.) Some of the early commentaries on the ultimatum game experiments mentioned altruism. Proposers don’t stiff the responders. They typically offer a little more than they have to, to get the statistically average responder
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else,” Boyd said. “It was so surprisingly different that I didn’t know what to expect anymore.” The finding precipitated an ambitious effort to compare ultimatum game play among the globe’s cultures, a sort of human genome project of bargaining behavior. The MacArthur Foundation kicked in money, followed by the National
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Science Foundation. One hypothesis was that ultimatum game behavior was a function of the importance of markets within a culture. “That’s actually a tricky thing to measure,” admitted Camerer. At one meeting
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cultures. There can be great differences in game play between nearby cultures (that are likely to be close genetically). This supports the idea that the ultimatum game is a cultural X-ray (in Camerer’s words), a way of understanding how societies deal with economic inequality. Many nonmarket cultures are founded on
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never forget? Presumably not. Given that, proposers might demand a larger percentage . . . There has been a lot of speculation about how different a million-dollar ultimatum game would be. Some economists have argued that their kind of rationality kicks in after a certain number of zeros in the prize amount. Elizabeth Hoffman
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somewhat the same terms. The people who are successful at it are good at exploiting their partners’ limited attention and bounded rationality. The two-offer ultimatum game resembles such venerable techniques as “dead dog on the table” and “good cop, bad cop.” A sharp bargainer will sometimes make an offer he knows
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that women earn less than similarly qualified men, even after allowing for every obvious factor that might distort the results. After Solnick learned about the ultimatum game, she reasoned that it could address the role of gender from a new angle. She wondered whether there would be gender differences even in the
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a negotiation. It’s not the woman’s unique responsibility to make everyone feel comfortable at all times. Contentious divorces are one example of an ultimatum game complicated by gender. The Welch divorce was not atypical of its kind. The spouse with greater earning power played proposer, demanding more than a 50
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coder in a cubicle. There is a “beauty premium” for the congenitally fabulous. For everyone else, there’s a plainness penalty. Sara Solnick thought the ultimatum game might be a way to investigate the effects of physical appearance on prices and salaries. This is normally a complicated matter, because there are many
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more. In sales or waiting tables, appearance is part of the total package. An employer can reason that the public likes an attractive face. The ultimatum game eliminates at least some of these factors. “There are no productivity issues, no expectations, and no contact between subjects,” Solnick and collaborator Maurice Schweitzer wrote
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. If looks matter even in the ultimatum game, they probably matter whenever people set a price or negotiate a salary. In Solnick and Schweitzer’s experiment, seventy student volunteers agreed to be photographed
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’s All About Testosterone Terence Burnham of Harvard’s Program for Evolutionary Dynamics conducted a much-discussed experiment on testosterone and bargaining. It was an ultimatum game in which the proposers each had $40 to split. They were required to choose between keeping $15 for themselves (leaving $25 for the responder) and
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the $5 offer. A high-testosterone minority did 80 percent of the vetoing. This is provocative because the veto is the emotional core of the ultimatum game. Everything else follows from it by mere logic. Proposers are “generous” to insure themselves against a veto. Gender differences in game play may reflect
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that responders veto to avoid appearing submissive. Concepts like money and logic and fairness came late in human evolution. The emotional behavior seen in the ultimatum game and in real-world price setting is presumably grounded in more basic and biological motives. In market societies, money is a medium of social dominance
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were more likely to pick fights with other boys. It did find that they were more likely to talk back to teachers. There have been ultimatum game experiments in which subjects were dosed with testosterone. “We essentially create alpha males in the study,” Claremont Graduate University neuroeconomist Paul Zak said of one
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. In the ultimatum game, administered testosterone has about the same effect as the naturally occurring kind, rendering responders more likely to veto low offers. Harvard psychologist Elena Kouri and
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with long ring fingers (relative to the index) excel at competitive sports and deal making, and are more likely to reject low offers in the ultimatum game. A Cambridge University group headed by John Coates examined financial traders and found correlations between ring-to-index-finger ratio and trading success, and also
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administered in the lab, oxytocin increases trusting behavior in money decisions. Paul Zak is credited with coining the term “neuroeconomics.” He has found that dosing ultimatum game players with oxytocin massively increases generosity. In a 2007 experiment conducted with Angela Stanton and Sheila Ahmadi, oxytocin boosted proposer offers 21 percent (from an
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of the unconscious and automatic. In a 2004 experiment at Stanford, Christian Wheeler and colleagues had volunteers perform a “visual acuity test” before playing the ultimatum game. The vision test consisted of sorting photographs by size. It was simply a pretext to show the subjects some photographs without arousing suspicions. One group
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images with no connection to business or money (a kite, a whale, an electrical outlet). This made a difference in how they subsequently played the ultimatum game. Proposers seeing the business pictures offered 14 percent less to responders than the control group’s proposers did. The players seeing kites or whales were
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, and Thaler 1986a, 731. 107 Discontinuing 10 percent bonus: Ibid., 732. 107 “Conventional economic analyses”: Ibid., 735; “the gap between the behavior”: Ibid., 731. 18. Ultimatum Game 109 Plautus dates; earliest complete works of Latin: See E. F. Watling’s introduction to Plautus 1964, 7–8. 109 “TRACHALIO: Right, then; listen”: Plautus
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1964, 131. 110 “The only share you’re going to get”: Ibid., 133–34. 112 “We were very pleased with the ultimatum game”: Kahneman interview, August 30, 2008. 112 “My brother and I”: Güth e-mail, August 13, 2008. 113 “That would have been overkilling”: Strategic Interaction Group
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of subjects in each). 114 “It’s the resentment”: Kahneman interview, August 30, 2008. 114 “The thing that’s truly bewildering”: Ibid. 114 “Is the Ultimatum Game the Ultimate Experiment?”: Halevy and Peters 2007. 114 “money alone does not rule the world”: Güth e-mail, August 13, 2008. 115 “Something special had
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Not a Culture 121 “My Israeli game theory professor”: “Mind your decisions” (blog) at mindyourdeci sions.com/blog/2008/01/15/game-theory-tuesdays-the-ultimatum-game-and-hollywood/. 121 Four-city study: Roth, Prasnikar, Okuno-Fujiware, and Zamir 1991. 121 40 percent among Israelis: Robinson 2007, 7. 121 “visibly upset” . . . “I
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: Kouri, Lukas, Pope, and Oliva 1995. 250 Married men have lower testosterone: See Khamsi 2007, which suggests the wedding ring tactic. 251 Ring finger and ultimatum game: Van den Bergh and Dewitte 2006. 251 Ring finger study: Coates, Gurnell, and Rustichini 2009. 49. Liquid Trust 252 Oxytocin boosted proposer offers 21 percent
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Decision Making 15, 65–77. Brozan, Nadine (1993). “Chronicle.” The New York Times, May 3, 1993. Burnham, Terence C. (2007). “High-Testosterone Men Reject Low Ultimatum Game Offers.” Proceedings of the Royal Society B 274, 2327–30. Butscher, Stephan A., Frank Luby, André Weber, and Cory Polonetsky (n.d.). “The Admission of
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Schwarze (1982). “An Experimental Analysis of Ultimatum Bargaining.” Journal of Economic Behavior and Organization 3, 367–88. Halevy, Yoram, and Michael Peters (2007). “Is the Ultimatum Game the Ultimate Experiment?” Available at www.cepr.org/meets/wkcn/6/6646/papers/Halevy.pdf. Hamermesh, D. S., and J. E. Biddle (1994). “Beauty and
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Games.” Games and Economic Behavior 7, 346–80. Hoffman, Elizabeth, Kevin A. McCabe, and Vernon L. Smith (1996). “On Expectations and the Monetary Stakes in Ultimatum Games.” International Journal of Game Theory 25, 289–301. Hower, Ralph M. (1943). History of Macy’s of New York 1858–1919. Cambridge, Mass.: Harvard University
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in Estimation Tasks.” Personality and Social Psychology Bulletin 21, 1161–66. Jensen, Keith, Josep Call, and Michael Tomasello (2007). “Chimpanzees Are Rational Maximizers in an Ultimatum Game.” Science 318, 107–9. Jensen, Marlene (2003). Pricing Psychology Report. Newtown, Conn.: Jensen-Fann. Jones, Del (2002). “Welch’s Wife Seeks Half of Fortune in
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Property Pricing Decisions.” Organizational Behavior and Human Decision Processes 84, 87–93. Oosterbeek, Hessel, Randolph Sloof, and Gijs van de Kuilen (2004). “Cultural Differences in Ultimatum Game Experiments: Evidence from a Meta-analysis.” Experimental Economics 7, 171–88. Orr, Dan, and Chris Guthrie (2006). “Anchoring, Information, Expertise, and Negotiation: New Insights from
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, Alan G., James K. Rilling, Jessica A. Aaronson, Leigh E. Nystrom, and Jonathan D. Cohen (2003). “The Neural Basis of Economic Decision-Making in the Ultimatum Game.” Science 300, 1755–58. Sarnoff, Paul (1965). Russell Sage: The Money King. New York: Ivan Obolensky. Savage, L. J. (1954). The Foundations of Statistics. New
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–60. ———(1983). “Transaction Utility Theory.” Advances in Consumer Research 10, 229. ———(1985). “Mental Accounting and Consumer Choice.” Marketing Science 4, 199– 214. ———(1988). “Anomalies: The Ultimatum Game.” The Journal of Economic Perspectives 2, 195–206. ———(1997). “Irving Fisher: Modern Behavioral Economist.” The American Economic Review 87, 439–41. ———(1999). “Mental Accounting Matters
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Ezarik, Justine, 172 Facebook, 195 fairness, 105–108, 110, 124, 218, 286; appearance of, 116; of jury awards, 20; opportunity price increases and, 161; in ultimatum game, 114 Family Guy, The (television show), 246 FareCompare.com, 183 Farrelly brothers, 109 fast food: bundling of, 160; charm prices of, 186, 188; see also
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, 207–208, 211; business, 197; divorce, 234–36; fairness in, 105, 116; gender and, 236–38, 241–44; race and, 242–44; see also bargaining; ultimatum game Nestlé, 6 Netflix, 174–75 Netherlands, 130–33 Nettle, Daniel, 283 neuroeconomics, 249–50, 252 Nevada Gaming Commission, 72 Newcastle University, 282 Newsweek, 125–26
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Gans, 53, 81–82, 87, 97, 125 Tversky, Genia, 81 Tversky, Yosef, 81 Twain, Mark, 194 Twitter, 195 Tyco Electronics Corporation, 234–35 UBS, 7 ultimatum game, 109–15, 120–21, 129– 30, 282; altruism and, 116–17; brain-scanning studies of, 168; in contentious divorces, 234–36, 238; cultural factors in
Spite: The Upside of Your Dark Side
by Simon McCarthy-Jones · 12 Apr 2021
contrast, we humans are likely, both literally and metaphorically, to fling the banana back.14 Admittedly, economists’ predictions of how people would behave in the Ultimatum Game did approximate the behavior of a specific group of Westerners. Members of this group are more likely than the average person to accept low offers
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significant amounts of free money. Before concluding that this tells us something important about people, let’s consider another objection. Perhaps spiteful behavior in the Ultimatum Game is limited to people from what have been called WEIRD (Western, educated, industrialized, rich, and democratic) societies.22 A remarkable series of studies, led
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good luck of getting to play the other role in the game.”25 They would have made fine economists. Henrich went on to run the Ultimatum Game in fourteen other small societies, including in Kenya, Ecuador, Paraguay, and Mongolia, publishing his results in 2001. He reported extreme variations in how people
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Although the extent of spitefulness may vary between cultures, for reasons we will come to later, it is not uniquely Western. The results of the Ultimatum Game seem pretty irresistible: spiteful behavior is common. Indeed, spite seems itching to get out of us. And when our inhibitions are lowered, spite practically pours
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content of .08 or more, making them legally intoxicated. The second thing the researchers learned was that drunk people rejected more low offers in the Ultimatum Game than sober people. Taking the brake off our brains releases the spite within. Another group of researchers investigated a similar question. However, they opted for
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material self-interest. Gintis and his colleague Sam Bowles propose that such people can instead be called Homo reciprocans.36 Their spiteful behavior in the Ultimatum Game is called “costly punishment.” They pay a personal price to punish another. Costly punishers are not saints. They don’t think, I must take
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fair. Different cultures have different norms related to sharing. This leads to substantial cross-cultural differences in how people respond to low offers in the Ultimatum Game. The Hadza people of Tanzania are reluctant to share. They view sharing as tolerated theft. Yet strong social sanctions force them to share. The
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Our emotional response to unfairness is not limited to anger. Another basic human emotion is also activated. If someone gets an unfair offer in the Ultimatum Game, their facial muscle reaction shows a characteristic pattern of disgust.59 Regions of their brain associated with disgust light up.60 The combination of anger
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variability is, the better you can control your emotions. As we would expect, those with high heart rate variability make fewer spiteful rejections in the Ultimatum Game.65 We can artificially increase our ability to control our anger, which also reduces spite. The neuroscientist Gadi Gilam and colleagues used a technique called
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Their goal was to increase the activity in a part of people’s brains that controls anger (the ventromedial prefrontal cortex) before they played the Ultimatum Game. To make sure people really were getting angry, they created an “anger-infused” version of the game.66 The researchers gave people low offers along
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neurostimulation to tie up the dorsolateral prefrontal cortex (remember, that’s the cost-benefit analysis part of people’s brain) during the Ultimatum Game.69 In this study, people played the Ultimatum Game with a twenty-dollar pot. The lowest offer players could make was four dollars. In a routine game, only 9 percent
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Fallows should get killed and their costly punishing genes die with them. The situation becomes starker when we consider third-party costly punishment. In the Ultimatum Game, people punish others who have acted unfairly toward them. This is called “second-party costly punishment.” But imagine you were watching two other people
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pretty hot. IF SPITING PEOPLE WHO ARE unfair to you typically escalates problems, why do we see so much of it in the Ultimatum Game? One reason is because the Ultimatum Game does not allow the punished person to retaliate. If laboratory games are changed to let players retaliate, around a quarter of people
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people can retaliate, directly spiting people who act unfairly toward you is much rarer than we might think from looking at the results of the Ultimatum Game. Anthropological studies of small tribal societies do not show people acting that way to maintain cooperation. Instead, they use alternative forms of counterdominant behaviors
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THERE ARE A COUPLE OF important caveats to the idea that a specific type of person, a Homo reciprocans, spitefully rejects low offers in the Ultimatum Game because they are prepared to reciprocate unfairness with costly punishment. The first, which we will discuss more in Chapter 4, is that simply suffering a
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nature provide armors of defense which cannot be transmuted into instruments of aggression.”121 More recent research has found that some spiteful players of the Ultimatum Game will make derisory offers to the helpless other in the Dictator Game. These players aren’t just driven by counterdominance; they want to become
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hatred of others having more than they; they are driven by a love of having more than others. Their rejection of low offers in the Ultimatum Game can be called dominant spite. Three DOMINANT SPITE “The most imperious of all necessities,” claimed the French writer Alexis de Tocqueville, “is that of
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others. They will offer a reasonable amount to the powerless other player in the Dictator Game. In contrast, another set of spiteful rejections in the Ultimatum Game comes from people who could be called Homo rivalis.2 They are predisposed to act selfishly, not cooperatively. They will make unfair offers in the
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normal drink. But on the other visit, it contained a substance that depleted their tryptophan levels. Crockett found that people acted more spitefully in the Ultimatum Game in the session when they first drank the tryptophan-depleting drink.17 This suggested that when serotonin levels go in one direction, levels of spite
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of the drinks contained an antidepressant, which increased serotonin levels. As expected, increasing people’s serotonin levels made them reject fewer unfair offers in the Ultimatum Game.18 They acted less spitefully. When serotonin levels go one way, levels of spite do indeed go in the other. The next question was how
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neurochemical factor influencing levels of spite. In men, testosterone influences spite. Men with higher levels of testosterone are more likely to act spitefully in the Ultimatum Game.22 This could be because higher levels of testosterone are associated with greater levels of anger.23 However, it may also relate to the role
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is what we turn to next. Four SPITE, EVOLUTION, AND PUNISHMENT Different people make different decisions about whether to accept a given offer in the Ultimatum Game. But how much of this difference can be attributed to genetic differences between people? The study of the genetics of spite is still in its
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dorsolateral prefrontal cortex. We have already seen that this cost-benefit analysis part of the brain contributes to the decision to reject offers in the Ultimatum Game. This part of the brain is under strong genetic control. Other candidate genes are those affecting dopamine levels in the brain, which can influence
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have taken another approach. They created a computer simulation to explore what would happen if people used a specific variety of strategies when playing the Ultimatum Game.20 They designed their study so that each virtual player adopted one of four strategies. Members of one group would accept any offer, and when
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SPITE PROVIDES AN IMPORTANT CAVEAT to the sentiment, famously expressed by a strategist of President Bill Clinton, that “it’s the economy, stupid.” As the Ultimatum Game shows, we are prepared to take an economic hit. We may do this, in a charitable interpretation, to encourage another to behave better in the
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The more of these questions you got right, the higher your levels of cognitive reflection. When people with high levels of cognitive reflection play the Ultimatum Game, they are less likely to act spitefully by rejecting low offers.34 Spite appears to be based on a gut response, whereas nonspitefully accepting offers
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us a way to overcome anger and limit spite. When experienced Buddhist meditators received offers of one dollar from a twenty-dollar pot in the Ultimatum Game, they were half as likely to reject it compared to nonmeditators.35 They achieved this by uncoupling their emotional reactions from their subsequent behavior, which
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immeasurables are compassion, happiness for others (appreciative joy), equanimity (being calm about others’ fate), and loving, unselfish kindness. Undertaking “appreciative joy” meditation before playing the Ultimatum Game makes you act less spitefully. One study found that 25 percent of people who had undertaken such pregame meditation accepted all the unfair offers they
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and Bonobos Are Insensitive to Unfairness,” Biology Letters 8, no. 6 (2012): 942–945. 14. There is some controversy about how chimps behave in the Ultimatum Game. Some researchers suggest that their failure to reject unfair offers is an artifact of the way the experiments have been run and that chimps actually
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do show some resistance to unfairness; see D. Proctor et al., “Chimpanzees Play the Ultimatum Game,” Proceedings of the National Academy of Sciences 110, no. 6 (2013): 2070–2075. Primatologists suggest that psychologists may have underestimated chimps’ cooperative abilities; see
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/150726-nuclear-reactor-fusion-science-kid-ngbooktalk/. Or perhaps just leave things well enough alone. 61. C. Eckel and P. Grossman, “Chivalry and Solidarity in Ultimatum Games,” Economic Inquiry 39 (2001): 171–188; Marcus et al., “The Psychology of Spite and the Measurement of Spitefulness”; R. R. Lynam and K. J.
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Ridley, The Rational Optimist: How Prosperity Evolves (London: Fourth Estate, 2010), 86. 64. H. Oosterbeek, R. Sloof, and G. Van De Kuilen, “Cultural Differences in Ultimatum Game Experiments: Evidence from a Meta-analysis,” Experimental Economics 7, no. 2 (2004): 171–188. 2. Counterdominant Spite 1. C. Boehm, Moral Origins: The Evolution of
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, 2012). 28. Morselli et al., “Social Dominance and Counter Dominance Orientation Scales.” 29. P. Brañas-Garza et al., “Fair and Unfair Punishers Coexist in the Ultimatum Game,” Scientific Reports 4 (2014): 6025. 30. Taken from the comments section of D. K. Marcus, “How Spiteful Are You?,” Psychology Today, May 23, 2014,
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Nature 415, no. 6868 (2002): 125–127. 37. K. M. Brethel-Haurwitz et al., “Is Costly Punishment Altruistic? Exploring Rejection of Unfair Offers in the Ultimatum Game in Real-World Altruists,” Scientific Reports 6 (2016): 18974. 38. Brethel-Haurwitz et al., “Is Costly Punishment Altruistic?” 39. J. C. Cardenas, “Social Norms and
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(2003): 1755–1758. 49. Henrich et al., “In Search of Homo economicus.” 50. P. Vavra, L. J. Chang, and A. G. Sanfey, “Expectations in the Ultimatum Game: Distinct Effects of Mean and Variance of Expected Offers,” Frontiers in Psychology 9 (2018): 992. 51. A. G. Sanfey, “Expectations and Social Decision-Making: Biasing
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Unfair Behavior,” Motivation and Emotion 38, no. 4 (2014): 578–588. 57. K. Gospic et al., “Limbic Justice: Amygdala Involvement in Immediate Rejection in the Ultimatum Game,” PLoS Biology 9, no. 5 (2011): e1001054. 58. K. S. Birditt and K. L. Fingerman, “Age and Gender Differences in Adults’ Descriptions of Emotional
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al., “Limbic Justice.” To take another example, oxytocin reduces aggression in males, but not females. As you would predict, giving oxytocin to people playing the Ultimatum Game reduces men’s likelihood of spitefully rejecting low offers, but not women’s. See R. Zhu et al., “Intranasal Oxytocin Reduces Reactive Aggression in Men
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Women: A Computational Approach,” Psychoneuroendocrinology 108 (2019): 172–181. 64. V. Grimm and F. Mengel, “Let Me Sleep on It: Delay Reduces Rejection Rates in Ultimatum Games,” Economics Letters 111, no. 2 (2011): 113–115. 65. B. D. Dunn et al., “Gut Feelings and the Reaction to Perceived Inequity: The Interplay Between
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Bodily Responses, Regulation and Perception Shapes the Rejection of Unfair Offers on the Ultimatum Game,” Cognitive and Affective Behavioral Neuroscience 12 (2012): 419–429. 66. G. Gilam et al., “Attenuating Anger and Aggression with Neuromodulation of the vmPFC: A
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Simultaneous tDCS-fMRI Study,” Cortex 109 (2018): 156–170; G. Gilam et al., “The Anger-Infused Ultimatum Game: A Reliable and Valid Paradigm to Induce and Assess Anger,” Emotion 19, no. 1 (2019): 84–96. 67. Given that neurostimulation led people to perceive
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20895–20899. 71. C. Speitel, E. Traut-Mattausch, and E. Jonas, “Functions of the Right DLPFC and Right TPJ in Proposers and Responders in the Ultimatum Game,” Social Cognitive and Affective Neuroscience 14, no. 3 (2019): 263–270. 72. D. Fetchenhauer and X. Huang, “Justice Sensitivity and Distributive Decisions in Experimental Games
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34 (2013): 164–175. 119. Herrmann, Thöni, and Gächter, “Antisocial Punishment Across Societies.” 120. Brañas-Garza et al., “Fair and Unfair Punishers Coexist in the Ultimatum Game.” 121. R. Niebuhr, Moral Man and Immoral Society: A Study in Ethics and Politics (Louisville, KY: Westminster John Knox Press, 2013 [1932]). 3. Dominant Spite
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, 2008, www.researchgate.net/publication/228372140_Competition_with_Skill_and_Luck. 12. P. Barclay and B. Stoller, “Local Competition Sparks Concerns for Fairness in the Ultimatum Game,” Biology Letters 10, no. 5 (2014): 20140213. 13. S. E. Hill and D. M. Buss, “Envy and Positional Bias in the Evolutionary Psychology of
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Retaliation in Humans,” Proceedings of the Royal Society B: Biological Sciences 280, no. 1750 (2013): 20122104. 22. T. C. Burnham, “High-Testosterone Men Reject Low Ultimatum Game Offers,” Proceedings of the Royal Society B: Biological Sciences 274, no. 1623 (2007): 2327–2330. 23. M. L. Batrinos, “Testosterone and Aggressive Behavior in Man
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Behavior,” Journal of Economic Behavior and Organization 83, no. 1 (2012): 125–135. 4. Spite, Evolution, and Punishment 1. B. Wallace et al., “Heritability of Ultimatum Game Responder Behavior,” Proceedings of the National Academy of Sciences 104, no. 40 (2007): 15631–15634. 2. S. Zhong et al., “Dopamine D4 Receptor Gene Associated
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Making,” Emotion 10 (2010): 815–821. 30. The original paper is D. P. Calvillo and J. N. Burgeno, “Cognitive Reflection Predicts the Acceptance of Unfair Ultimatum Game Offers,” Judgment and Decision Making 10, no. 4 (2015): 332–341, and the questions were retrieved from http://journal.sjdm.org/14/14715/stimuli.pdf
Cognitive Surplus: Creativity and Generosity in a Connected Age
by Clay Shirky · 9 Jun 2010 · 236pp · 66,081 words
mindful and supportive of other people’s goals is fundamental to human life—so fundamental, in fact, that we actually have trouble turning it off. ULTIMATUM GAME For the second half of the twentieth century, mainstream economics (often labeled neoclassical economics) typically located the effects of human emotion outside financial transactions, either
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the part of human behavior the researcher is interested in. One of the most famous and elegant experimental games in social science is called the Ultimatum Game, first tried in 1982 by Werner Güth, Rolf Schmittberger, and Bernd Schwarze at the University of Cologne, and repeated countless times around the world, because
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its results were so at odds with the predictions of neoclassical economics. The Ultimatum Game is a two-person interaction. Imagine you and a stranger are the players, and you each have a role: your unknown partner is the proposer
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shock to neoclassical theory (what rational actor would give up a free dollar for the sake of mere emotional satisfaction?). As the results of the Ultimatum Game became more widespread, so did the challenges to its conclusions. Versions were run with hundreds of dollars at stake, with ever-tighter controls on the
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countless variations, but the attempt to uncover the secretly rational core of humanity simply failed. No group of proposers playing the classic version of the Ultimatum Game ever behaved as selfishly as neoclassical theory predicted, and no group of responders was ever moved to accept a proposed split that deviated too far
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from some perceived sense of fairness, no matter how sensible such a choice would be in the short term. In the Ultimatum Game, people behave as if their relationship matters, even if they are told it doesn’t, even if they are assured it doesn’t, even if
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they have only a single interaction with an unknown partner. Critiques of the Ultimatum Game have contended that the game would work if the participants were convinced that their action would have no social consequences outside the game. This criticism
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such isolation is rare and unnatural. (Even economics students, famously among the greediest proposers in the Ultimatum Game, never get anywhere near nine-to-one splits.) Conceived as a psychological rather than an economics experiment, the Ultimatum Game and its variants show that we are incapable of behaving as if we weren’t members
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will be willing to give up other rewards (in this case monetary) in order to have that feeling. One of the few variations of the Ultimatum Game that does produce behavior in line with neoclassical predictions is when several responders compete to get a share of a single proposer’s cash and
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defect from norms of fairness or good behavior, even when meting out that punishment costs them something. This is exactly what responders do in the Ultimatum Game when they reject low offers, and because society enjoys the benefits of this individually costly behavior, it is called altruistic punishment. People derive pleasure from
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punishing wrongdoing, even if it costs them time, energy, or money to do so. In the Ultimatum Game, responders punish skin-flint proposers by refusing the offered share of the money, but what they get in return is the satisfaction of knowing the
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is, the greater the likelihood that its members will be reflexively generous and open with one another. As a way of testing this hypothesis, the Ultimatum Game has been tried in a variety of different cultures, and it turns out that selfishness and market forces are indeed correlated. The surprise is that
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cognitive surplus. The trick is in knowing when markets are an optimal way of organizing interactions and when they are not. In particular, as the Ultimatum Game shows, when concerns of fairness around issues other than price arise, normal people’s internalized sense of how to treat others is hard to suppress
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sense of right and wrong when dealing with irrigation or fishing rights becomes an essential tool. This internalization relies on the finding demonstrated by the Ultimatum Game; namely that people in social circumstances will moderate their behavior to be less selfish. The social reduction of selfish impulses can be triggered easily. When
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’s wonderful 2008 book on behavioral economics), and markets turn out to be a special case, effective only under tightly controlled conditions. As with the Ultimatum Game, the default human behavior relies on mutual regard for other participants, even when there’s money to be made. The second thing that has happened
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offending phone users within seconds. They even take a certain pleasure in policing the rules of the quiet car, the same effect observed in the Ultimatum Game, when responders are willing to expend resources to punish ungenerous proposers. Given the many examples of rudeness and mobile phone use in public, what’s
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ideas of a group and spread them: Michael Farrell, Collaborative Circles: Friendship Dynamics and Creative Work (New York: New York University Press, 2001). 105 the Ultimatum Game: Werner Güth, Rolf Schmittberger, and Bernd Schwarze, “An Experimental Analysis of Ultimatum Bargaining,” Journal of Economic Behaviour and Organization 3.4 (1982): 367-88. 107
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media tools and norms of online study groups and open source software and participation and participatory culture sharing and social media and social production and Ultimatum Game and value and customer versus product research Dahl, Roald David Foster Foundation day-care centers Deci, Edward defaults Delicious.com democracies Derrick, Jaye deterrence de
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for wider distribution of See also social production Mangalore, India markets communal sharing versus crash of 1987, emotional components of transactions motivation and selfishness and Ultimatum Game and value and Markus, Megan McEwan, Melissa McHenry, Robert McWilliams, Andrew media balanced versus unbalanced changes in landscape of connectedness and cultural diversity and definitions
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digital media; new media tools; professional media makers; social media; television medical information Meetup.com membership amateur design and PatientsLikeMe.com and as social motivation Ultimatum Game and value and Merton, Georgia Microsoft Minow, Newton Mirzoeff, Nicholas misogyny mobile phones Amtrak’s quiet cars and cameras and global interconnection and memorizing phone
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surrogacy and young people and Tetzel, John theory-induced blindness Tomasello, Michael Torvalds, Linus traditionalists traditions versus accumulated accidents trust, between men and women Twitter Ultimatum Game U.S. Constitution Usenet user-generated content user-generated reviews and ratings user-generated surprises Ushahidi value behavior and civic value communal value connectedness and
Life You Can Save: Acting Now to End World Poverty
by Peter Singer · 3 Mar 2009 · 190pp · 61,970 words
our sense of fairness that, to prevent others getting more than their fair share, we are often willing to take less for ourselves. In the “ultimatum game,” two players are told that one of them, the proposer, will be given a sum of money, say $10, and must divide it with the
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John Darley, The Unresponsive Bystander, chapters 6 and 7. 21. There is a substantial literature on the ultimatum game. For a useful discussion, see Martin Nowak, Karen Page, and Karl Sigmund, “Fairness Versus Reason in the Ultimatum Game,” Science 2W (2000), pp. 1773-75. 22. S. F. Brosnan and F.B.M. de Waal
Misbehaving: The Making of Behavioral Economics
by Richard H. Thaler · 10 May 2015 · 500pp · 145,005 words
had published a paper on precisely this game three years earlier. They used exactly the same methods and had a snappy name for it: the Ultimatum Game. Danny was crestfallen when he heard this news, worried as always that his current idea would be his last. (This is the same man who
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nicely to someone else, rather than share with a student who was greedy in the same situation?” We thought that the Punishment Game, like the Ultimatum Game, would tell us whether people are willing to give something up to punish someone who behaves in a manner they consider “unfair.” Somewhat surprisingly to
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punish those who make them. It is less clear that people feel morally obliged to make fair offers. Although it is true that in the Ultimatum Game the most common offer is often 50%, one cannot conclude that Proposers are trying to be fair. Instead, they may be quite rationally worried about
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being rejected. Given the empirical evidence on respondents’ behavior, the profit-maximizing strategy in the Ultimatum Game is for the Proposer to offer about 40% of the pie. Lower offers start to run the risk of being rejected, so a 50% offer
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is not far from the rational selfish strategy. Whether the offers made by Proposers are driven by fairness or selfish concerns, the outcomes of the Ultimatum Game appear to be quite robust. Proposers make offers of close to half the pie, and Responders tend to reject offers of less than 20%. The
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tribes the results are pretty similar. Nevertheless, one question that people have long wondered about is whether the tendency to reject small offers in the Ultimatum Game persists as stakes increase. A natural intuition shared by many is that as the stakes go up, the minimum offer that will be accepted goes
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? Investigating this hypothesis has been plagued by two problems: running a high-stakes version of the Ultimatum Game is expensive, and most Proposers make “fair” offers. Experimenters in the United States ran a version of the Ultimatum Game for $100, and the results did not differ much from lower-stakes games. Even more telling
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from running the game in poor countries, where the cost of living allows experimenters to raise the stakes even higher. For example, Lisa Cameron ran Ultimatum Game experiments in Java using both low stakes and truly high stakes (approximately three months’ income for the subjects). She found virtually no difference in the
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fairness was a silly concept mostly used by children who don’t get their way, and the skeptics just brushed aside our survey data. The Ultimatum Game experiments were a bit more troubling, since actual money was at stake, but of course it wasn’t all that much money, and all the
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in the Dictator Game, giving away money to an anonymous stranger, but also seem to be mean to others who treat them unfairly in the Ultimatum Game. So, does increasing the happiness of someone else make us happier too, or does it make us less happy, perhaps because of envy? The answer
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we ignoring evolution? Didn’t evolutionary biology explain many of the odd behaviors discussed in the paper, such as turning down small offers in the Ultimatum Game, or ignoring sunk costs? Couldn’t evolution explain these and all our other “cognitive quirks” (a slyly deprecating term he insisted on using)? His thought
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was that if humans had evolved to pay attention to sunk costs, or resist unfair offers in the Ultimatum Game, then such behavior must be good for us, in some sense, and therefore rational. Problem solved. I assured him that I was not a creationist
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introduce the one bit of new experimental data we had included in the paper. The data came from a version of the Ultimatum Game. In the usual version of the Ultimatum Game, the experimenter provides the money that the participants divide. Now we had created a version in which the experimenter makes money! We
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of an in-class demonstration. (Participation was voluntary.) Then each student filled out a form indicating how he would play a $10 version of the Ultimatum Game, with the money coming from the $5 each player had contributed. Players indicated their contingent decisions both as Proposer and as Responder, were told that
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unfair offers, they can get angry enough to punish the other party, even at some cost to themselves. That is the basic lesson of the Ultimatum Game. As the willow tree story illustrates, the same can occur in situations in which the Coase theorem is often applied. After a lawsuit, both sides
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was just getting started. Another domain that attracted the “what if you raise the stakes?” complaint was so-called “other-regarding” behavior, such as the Ultimatum Game and Dictator Game. Here again, researchers had been able to raise the stakes to a few months’ income, but some still wondered what would happen
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(2014). Chapter 15: Fairness Games 141 three German economists: Güth, Schmittberger, and Schwarze (1982). I wrote a survey article on this and other papers studying Ultimatum Games (Thaler, 1988b). 141 Dictator Game: Kahneman, Knetch, and Thaler (1986). 142 some remote tribes: The Machiguenga people in the Peruvian Amazon rarely turn down any
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Odean (2002) find that investors trade more and more speculatively after switching from phone-based to online trading. 301 “other-regarding” behavior, such as the Ultimatum Game and Dictator Game: Rabin (1993); Tesler (1995); Levitt and List (2007). 301 low-stakes experiments of the Prisoner’s Dilemma: See Sally (1995) for a
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Experiment.” Working Paper 20695, National Bureau of Economic Research. Andersen, Steffen, Seda Ertaç, Uri Gneezy, Moshe Hoffman, and John A. List. 2011. “Stakes Matter in Ultimatum Games.” American Economic Review 101, no. 7: 3427–39. Andreoni, James. 1988. “Why Free Ride?: Strategies and Learning in Public Goods Experiments.” Journal of Public Economics
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and Hoang’s NBA Data.” Journal of Economic Behavior and Organization 39, no. 1: 59–82. Cameron, Lisa Ann. 1999. “Raising the Stakes in the Ultimatum Game: Experimental Evidence from Indonesia.” Economic Inquiry 37, no. 1: 47–59. Carlson, Nicolas. 2014. “What Happened When Marissa Mayer Tried to Be Steve Jobs.” New
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Naïveté about Self-Control in the Credit Market.” American Economic Review 100, no. 5: 2279–303. Henrich, Joseph. 2000. “Does Culture Matter in Economic Behavior? Ultimatum Game Bargaining among the Machiguenga of the Peruvian Amazon.” American Economic Review 90, no. 4: 973–9. ———, Wulf Albers, Robert Boyd, Gerd Gigerenzer, Kevin A McCabe
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Empirical Case for Two Systems of Reasoning.” Psychological Bulletin 119, no. 1: 3. Slonim, Robert L., and Alvin E. Roth. 1998. “Learning in High Stakes Ultimatum Games: An Experiment in the Slovak Republic.” Econometrica 66, no. 3: 569–96. Smith, Adam. (1759) 1981. The Theory of Moral Sentiments. Reprint edited by D
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Richard H. Thaler. 2003. “Libertarian Paternalism Is Not an Oxymoron.” University of Chicago Law Review 70, no. 4: 1159–202. Telser, L. G. 1995. “The Ultimatum Game and the Law of Demand.” Economic Journal 105, no. 433: 1519–23. Thaler, Richard H. 1980. “Toward a Positive Theory of Consumer Choice.” Journal of
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Economic Perspectives 1, no. 2: 169–77. ———. 1988a. “Anomalies: The Winner’s Curse.” Journal of Economic Perspectives 2, no. 1: 191–202. ———. 1988b. “Anomalies: The Ultimatum Game.” Journal of Economic Perspectives 2, no. 4: 195–206. ———. 1992. The Winner’s Curse: Paradoxes and Anomalies of Economic Life. New York: Free Press. ———. 1994
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, Ethan. 2013. “We Aren’t the World.” Pacific Standard, February 5. Available at: http://www.psmag.com/magazines/magazine-feature-story-magazines/joe-henrich-weird-ultimatum-game-shaking-up-psychology-economics-53135/. Whitehead, Mark, Rhys Jones, Rachel Howell, Rachel Lilley, and Jessica Pykett. 2014. “Nudging All Over the World: Assessing the Global
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’s laziness praised by, xv–xvi on theory-induced blindness, 93 and Tversky’s cancer, xiii–xiv two-system view of mind, 103, 109 and Ultimatum Game, 140, 141, 267 unambiguous questions studied by, 295–96 Wanner given advice by, 177 Kan, Raymond, 243 Karlan, Dean, 19 Kashyap, Anil, 272, 273 Katrina
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Sufi, Amir, 78 suggested retail price, 61–63 Summers, Larry, 178, 239–40, 247 sunk costs, 21, 52, 64–73, 118, 180, 261 and revised Ultimatum Game, 266–67 Sunstein, Cass, 258, 260, 269, 322, 323–25, 330, 333, 343, 345 on ethics of nudging, 337n Super Bowl, 139n, 359 supermarkets, 62n
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, xiv–xv Tversky, Tal, xv Twain, Mark, 355 “two-pocket” mental accounting, 81–82 two-system view of mind, 103, 109 Uber, 136–38, 200n Ultimatum Game, 140–41, 142, 160, 182, 261, 301 revised version of, 266–67 unemployment rate, 47 United Kingdom, 10, 11, 330–45 tax revenue in, 334
The Irrational Bundle
by Dan Ariely · 3 Apr 2013 · 898pp · 266,274 words
would never make. It is another matter altogether to realize that these emotional influences can continue to affect us for a long, long time. The Ultimatum Game To test our emotional-cascade idea, Eduardo and I had to do three key things. First, we had to either irritate people or make them
…
any long-lasting influence on their later choices. We got our participants to make decisions as part of an experimental setup that economists call the ultimatum game. In this game there are two players, the sender and the receiver. In most setups, the two players sit separately, and their identities are hidden
…
receiver rejects the offer, all the money goes back to the experimenter, and both players get nothing. Before I describe our particular version of the ultimatum game, let’s stop for a second and think about what might happen if both players made perfectly rational decisions. Imagine that the experimenter has given
…
making the unfair offer (see chapter 5, “The Case for Revenge”). Following these findings, brain-imaging research has shown that receiving unfair offers in the ultimatum game is associated with activation in the anterior insula—a part of the brain associated with negative emotional experience. Not only that, but the individuals who
…
someone were to suggest a $19:$1 split. This understanding of how unfair offers make people feel and behave is why most people in the ultimatum game offer splits that are closer to $12:$8 and why those splits are almost always accepted. I should note that there is one interesting exception
…
of caring about fairness. Economists and students taking economics classes are trained to expect people to behave rationally and selfishly. So when they play the ultimatum game, economic senders think that the right thing to do is to propose a $19:$1 split, and—since they are trained to think that acting
…
intended gnashing of teeth that the unpleasant memory has aroused), you move to the next room, where a graduate student explains the rules of the ultimatum game. You take a seat and wait to receive your offer from the unknown sender. When you get the $7.50:$2.50 offer a few
…
and wrote about their own experiences. The response to the films was a different experience altogether that should have had nothing to do with the ultimatum game. Nevertheless, the irrelevant emotions did matter as they spilled over into participants’ decisions in the game. Presumably, the participants in the angry condition misattributed their
…
an unfair offer. Next came the delay to allow the emotions to dissipate. Finally came the most important part of this experiment: they played another ultimatum game, but this time they acted as senders rather than receivers. As senders they could propose any offer to another participant (the receiver)—who could then
…
that as we examine more complex types of decisions, we will start seeing some gender differences. For example, when we made the situation in our ultimatum game experiment more complex, we stumbled on an interesting difference in the ways men and women react to unfair offers. Imagine that you are the receiver
…
. A. G. Sanfey, J. K. Rilling, J. A. Aronson, L. E. Nystrom, and J. D. Cohen, “The Neural Basis of Economic Decision-Making in the Ultimatum Game,” Science 300 (2003): 1755–1758. 24. Franklin D. Roosevelt, Oglethorpe University commencement address, May 22, 1932. Bibliography and Additional Readings Below is a list of
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and Capital-Labor-Production Framework,” Journal of Risk and Uncertainty 19, no. 1 (1999): 7–42. Robert Slonim and Alvin Roth, “Learning in High Stakes Ultimatum Games: An Experiment in the Slovak Republic,” Econometrica 66, no. 3 (1998): 569–596. Richard Thaler, “Toward a Positive Theory of Consumer Choice,” Journal of Economic
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), 241–42, 249–50, 254 Andrade, Eduardo, 262, 265, 267–68, 299 anger, acting on, 257 author’s anecdote of, 258–61 driving and, 261 ultimatum game and, 268, 269–70, 273, 274, 276 animals: empathy for suffering of, 249 generalizing about human behavior from studies on, 63 working for food preferred
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, 5–6 short-term, long-term decisions affected by, 264–65, 270–74, 276–77 stability of strategies for, 261–65; see also self-herding ultimatum game and, 265–70, 275–76 dentistry, adaptation to pain and, 161–62 design, taking people’s physical limitations into account in, 230–32 destroying work
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. direct current (DC), 117–19 emotional cascades, 265–78 gender differences and, 274–76 romantic relationships and, 277–78 ultimatum game and, 265–76 emotional priming: empathy for plight of others and, 246–48 ultimatum game and, 268–70 emotions, 43, 237–79 appeals to, willingness to help others and, 240–42, 248–50
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, 49–51 see also specific topics Exxon Valdez oil spill, 249 F fairness, sense of: in chimpanzees, 127 decision making and, 266–67; see also ultimatum game gender differences and, 275–76 Fallows, James, 158 Farmer, Tom, 140–41, 146, 148–49 FedEx, 108–9 feedback, about work, 74–76 Feeks, John
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), 198–99 Frank, Barney, 41 Frankl, Viktor, 45 free food, animals’ preference for working for food vs., 60–62 Frenk, Hanan, 161–65, 300 Friends, ultimatum game and, 269, 270–71, 272 frog experiment, 157–58 Frost, Jeana, 219–20, 229, 300 Fryer, Bronwyn, 148 furniture, do-it-yourself, 83–84, 96
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reducing meaningfulness of work, 66–74, 77, 80 letter-pairs experiment, 74–76, 80 life-altering events, hedonic adaptation and, 170 Life as a House, ultimatum game and, 268, 269, 270, 272, 276 light, adaptation to changes in, 159 Local Motors, Inc., 88, 89 Loewenstein, George, 21, 44, 80–81, 172–73
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for, 126–27 pleasure elicited by, 124–26 R “Ransom of Red Chief, The” (Henry), 98 rational economics, 5–6 trust game and, 125, 127 ultimatum game and, 266, 267 rationalization, 287 Recall Last Three Numbers game, 23, 34 relaxation, enjoyment derived from effort vs., 105–6 restaurants, revenge for bad service
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and, 151, 153 pleasure of punishment and, 124–26 success stories built on motivation for, 154 threat of, as effective enforcement mechanism, 124 revenge (cont.) ultimatum game and, 275–76 weak and strong, 136–37 wise men’s warnings against, 151 see also customer revenge risk taking, 188 Roll-up game, 24
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Scitovsky, Tibor, 188 SeekaTreat, 59–60 self-herding, 262–64, 276 negative emotions as input for, 263–64 specific and general versions of, 271–74 ultimatum game and, 270–74 self-made goods, attachment to, see IKEA effect senses, adaptive ability of, 158–60 “Sensuous Chocolate Truffles,” Sandra Lee’s recipe for
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, 125–26, 127 bailout plan from perspective of, 130 tuberculosis, 250, 251 TV commercials, 181n Tversky, Amos, 32n Twain, Mark, 107–8, 116, 151 U ultimatum game, 265–77 after dissipation of original emotions, 270–71 gender differences and, 275–76 incidental emotions introduced into, 268–70 with participants in role of
Liars and Outliers: How Security Holds Society Together
by Bruce Schneier · 14 Feb 2012 · 503pp · 131,064 words
punishing aren't calculating and will attempt to be fair and honest. (13) Neuroscience is starting to make inroads into that question, too. (14) The Ultimatum game was first developed in 1982, and has been replicated repeatedly by different researchers using different variants in different cultures; there are hundreds of academic papers
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about the Ultimatum game. Here's how the game works. Two strangers are put in separate rooms and told they will divide a pot of money between them. They
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amounts of money, and in places where small amounts of money make a big difference. Results are consistent. (15) The Dictator game is like the Ultimatum game, but with one critical difference: the second player is completely passive. The first player gets to divide the money, and both players receive their share
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to keep all of it, he does. The second player has no say in the division or whether or not it is accepted. In the Ultimatum game, the first player had to worry if the second player would penalize him. The Dictator game removes all of that second-guessing. The first player
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of the time. Other experimental results are more lopsided than that, and the first player's division tends to be less fair than in the Ultimatum game, but not as unfair as it could be. (16) In the Trust game, the first player gets a pile of money. He can either keep
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more-or-less split the difference and contribute half. (18) One of the theories originally advanced to explain the first player's behavior in the Ultimatum game was fear of rejection. According to that theory, he is motivated to offer the second player a decent percentage of the total because he doesn
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put it, “concerns for a fair distribution originate from personal and social rules that effectively constrain self-interested behavior.” Joseph Henrich interviewed his subjects after Ultimatum game experiments and found that they thought a lot about fairness. First players wanted to do what was fair. Second players accepted offers they thought were
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result. (22) Lots of fraud is based on feigning group identity. (23) About three-quarters of people give half of the money away in the Ultimatum game, but a few keep as much as possible for themselves. The majority of us might be altruistic and cooperative, but the minority is definitely selfish
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their history, have such a high disease rate: there's just not enough variety in the gene pool: Amish, too. (11) The game was the Ultimatum game (see note 14 in Chapter 3 for a full description). The goal was to find people isolated from modern society, and the Machiguenga tribe fit
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. This isn't surprising since people tend to see themselves in others. (2) Reputation mattered in the various “game” experiments mentioned in Chapter 3: the Ultimatum game, the Dictator game, the Public Goods game, and so on. Subjects were more altruistic, more fair, and more cooperative when their actions were known to
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G. Sanfey, James K. Rilling, Jessica A. Aronson, Leigh E Nystrom, and Jonathan D. Cohen (2003), “The Neural Basis of Economic Decision-Making in the Ultimatum Game,” Science, 300:1755–8. Tania Singer, Ben Seymour, John P. O'Doherty, Klass E. Stephan, Raymond J. Dolan, and Chris D. Frith (2006), “Empathic Neural
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and justice Katarina Gospic, Erik Mohlin, Peter Fransso, Predrag Petrovic, Magnus Johannesson, and Martin Ingvar (2011), “Limbic Justice: Amygdala Involvement in Immediate Rejection in the Ultimatum Game,” PLoS Biology, 9 (5): e1001054. and attractive Tania Singer, Ben Seymour, John P. O'Doherty, Klass E. Stephan, Raymond J. Dolan, and Chris D. Frith
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Press, 5–6. Neuroscience is starting Kerri Smith (2011), “Neuroscience vs Philosophy: Taking Aim at Free Will,” Nature, 477:23–5. Ultimatum game Charles A. Holt (2000), “Y2K Bibliography of Experimental Economics and Social Science: Ultimatum Game Experiments,” University of Virginia. Hessel Oosterbeek, Randolph Sloof, and Gijs van de Kuilen (2004), “Cultural Differences in
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Ultimatum Game Experiments: Evidence From a Meta-Analysis,” Experimental Economics, 7:171–88. how the game works Werner Güth, Rolf Schmittberger, and Bernd Schwarze (1982), “An Experimental
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Ultimatum Bargaining,” Journal of Economic Behavior & Organization, 3:267–88. turn down offers Hessel Oosterbeek, Randolph Sloof, and Gijs van de Kuilen (2004), “Differences in Ultimatum Game Experiments: Evidence from a Meta-Analysis,” Experimental Economics, 7:171–88. cultural backgrounds Donna L. Bahry (2004), “Trust in Transitional Societies: Experimental Results from Russia
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(2008), “Collective Action in Action: Prosocial Behavior In and Out of the Laboratory,” 110:179–90. Joseph Henrich (2000), “Does Culture Matter in Economic Behavior? Ultimatum Game Bargaining Among the Machiguenga of the Peruvian Amazon,” American Economic Review, 90:973–9. Joseph Henrich, Robert Boyd, Samuel Bowles, Colin Camerer, Ernst Fehr, Herbert
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Games,” Games & Economic Behavior, 7:346–80. other way, too Bradley J. Ruffle (1998), “More Is Better, But Fair Is Fair: Tipping in Dictator and Ultimatum Games,” Games & Economic Behavior, 23:247–76. punish other players Christopher T. Dawes, James H. Fowler, Tim Johnson, Richard McElreath, and Oleg Smirnov (2007), “Egalitarian Motivations
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. Mary Jane McKay (11 Feb 2009), “Genetic Disorders Hit Amish Hard,” CBS News. isolated from modern Joseph Henrich (2000), “Does Culture Matter in Economic Behavior? Ultimatum Game Bargaining Among the Machiguenga of the Peruvian Amazon,” American Economic Review, 90:973–9. wash their hands John M. Lynn (2000), “Method and Apparatus for
The Upside of Irrationality: The Unexpected Benefits of Defying Logic at Work and at Home
by Dan Ariely · 31 May 2010 · 324pp · 93,175 words
would never make. It is another matter altogether to realize that these emotional influences can continue to affect us for a long, long time. The Ultimatum Game To test our emotional-cascade idea, Eduardo and I had to do three key things. First, we had to either irritate people or make them
…
any long-lasting influence on their later choices. We got our participants to make decisions as part of an experimental setup that economists call the ultimatum game. In this game there are two players, the sender and the receiver. In most setups, the two players sit separately, and their identities are hidden
…
receiver rejects the offer, all the money goes back to the experimenter, and both players get nothing. Before I describe our particular version of the ultimatum game, let’s stop for a second and think about what might happen if both players made perfectly rational decisions. Imagine that the experimenter has given
…
making the unfair offer (see chapter 5, “The Case for Revenge”). Following these findings, brain-imaging research has shown that receiving unfair offers in the ultimatum game is associated with activation in the anterior insula—a part of the brain associated with negative emotional experience. Not only that, but the individuals who
…
someone were to suggest a $19:$1 split. This understanding of how unfair offers make people feel and behave is why most people in the ultimatum game offer splits that are closer to $12:$8 and why those splits are almost always accepted. I should note that there is one interesting exception
…
of caring about fairness. Economists and students taking economics classes are trained to expect people to behave rationally and selfishly. So when they play the ultimatum game, economic senders think that the right thing to do is to propose a $19:$1 split, and—since they are trained to think that acting
…
intended gnashing of teeth that the unpleasant memory has aroused), you move to the next room, where a graduate student explains the rules of the ultimatum game. You take a seat and wait to receive your offer from the unknown sender. When you get the $7.50:$2.50 offer a few
…
and wrote about their own experiences. The response to the films was a different experience altogether that should have had nothing to do with the ultimatum game. Nevertheless, the irrelevant emotions did matter as they spilled over into participants’ decisions in the game. Presumably, the participants in the angry condition misattributed their
…
an unfair offer. Next came the delay to allow the emotions to dissipate. Finally came the most important part of this experiment: they played another ultimatum game, but this time they acted as senders rather than receivers. As senders they could propose any offer to another participant (the receiver)—who could then
…
that as we examine more complex types of decisions, we will start seeing some gender differences. For example, when we made the situation in our ultimatum game experiment more complex, we stumbled on an interesting difference in the ways men and women react to unfair offers. Imagine that you are the receiver
…
. A. G. Sanfey, J. K. Rilling, J. A. Aronson, L. E. Nystrom, and J. D. Cohen, “The Neural Basis of Economic Decision-Making in the Ultimatum Game,” Science 300 (2003): 1755–1758. 24. Franklin D. Roosevelt, Oglethorpe University commencement address, May 22, 1932. Bibliography and Additional Readings Below is a list of
…
and Capital-Labor-Production Framework,” Journal of Risk and Uncertainty 19, no. 1 (1999): 7–42. Robert Slonim and Alvin Roth, “Learning in High Stakes Ultimatum Games: An Experiment in the Slovak Republic,” Econometrica 66, no. 3 (1998): 569–596. Richard Thaler, “Toward a Positive Theory of Consumer Choice,” Journal of Economic
…
), 241–42, 249–50, 254 Andrade, Eduardo, 262, 265, 267–68, 299 anger, acting on, 257 author��s anecdote of, 258–61 driving and, 261 ultimatum game and, 268, 269–70, 273, 274, 276 animals: empathy for suffering of, 249 generalizing about human behavior from studies on, 63 working for food preferred
…
, 5–6 short-term, long-term decisions affected by, 264–65, 270–74, 276–77 stability of strategies for, 261–65; see also self-herding ultimatum game and, 265–70, 275–76 dentistry, adaptation to pain and, 161–62 design, taking people’s physical limitations into account in, 230–32 destroying work
…
. direct current (DC), 117–19 emotional cascades, 265–78 gender differences and, 274–76 romantic relationships and, 277–78 ultimatum game and, 265–76 emotional priming: empathy for plight of others and, 246–48 ultimatum game and, 268–70 emotions, 43, 237–79 appeals to, willingness to help others and, 240–42, 248–50
…
, 49–51 see also specific topics Exxon Valdez oil spill, 249 F fairness, sense of: in chimpanzees, 127 decision making and, 266–67; see also ultimatum game gender differences and, 275–76 Fallows, James, 158 Farmer, Tom, 140–41, 146, 148–49 FedEx, 108–9 feedback, about work, 74–76 Feeks, John
…
), 198–99 Frank, Barney, 41 Frankl, Viktor, 45 free food, animals’ preference for working for food vs., 60–62 Frenk, Hanan, 161–65, 300 Friends, ultimatum game and, 269, 270–71, 272 frog experiment, 157–58 Frost, Jeana, 219–20, 229, 300 Fryer, Bronwyn, 148 furniture, do-it-yourself, 83–84, 96
…
reducing meaningfulness of work, 66–74, 77, 80 letter-pairs experiment, 74–76, 80 life-altering events, hedonic adaptation and, 170 Life as a House, ultimatum game and, 268, 269, 270, 272, 276 light, adaptation to changes in, 159 Local Motors, Inc., 88, 89 Loewenstein, George, 21, 44, 80–81, 172–73
…
for, 126–27 pleasure elicited by, 124–26 R “Ransom of Red Chief, The” (Henry), 98 rational economics, 5–6 trust game and, 125, 127 ultimatum game and, 266, 267 rationalization, 287 Recall Last Three Numbers game, 23, 34 relaxation, enjoyment derived from effort vs., 105–6 restaurants, revenge for bad service
…
and, 151, 153 pleasure of punishment and, 124–26 success stories built on motivation for, 154 threat of, as effective enforcement mechanism, 124 revenge (cont.) ultimatum game and, 275–76 weak and strong, 136–37 wise men’s warnings against, 151 see also customer revenge risk taking, 188 Roll-up game, 24
…
Scitovsky, Tibor, 188 SeekaTreat, 59–60 self-herding, 262–64, 276 negative emotions as input for, 263–64 specific and general versions of, 271–74 ultimatum game and, 270–74 self-made goods, attachment to, see IKEA effect senses, adaptive ability of, 158–60 “Sensuous Chocolate Truffles,” Sandra Lee’s recipe for
…
, 125–26, 127 bailout plan from perspective of, 130 tuberculosis, 250, 251 TV commercials, 181n Tversky, Amos, 32n Twain, Mark, 107–8, 116, 151 U ultimatum game, 265–77 after dissipation of original emotions, 270–71 gender differences and, 275–76 incidental emotions introduced into, 268–70 with participants in role of
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