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At 03:06 PM 2/10/2002 +0100, Salice wrote:
>On 10 Feb 2002, at 4:27, Ray Recchia wrote:
> > As discussed in the article a similar game was used to study human gift
> > giving and acceptance practices in 15 societies. There was a fair amount
> > of culture variation but it was found that people would consistently give
> > more than a pure logical analysis would suggest was correct.
>What did this "pure logical analysis" consist of?
Here's an excerpt. You'll have to read the article for the rest.
Imagine that somebody offers you $100. All you have to do is agree with
some other anonymous person on how to share the sum. The rules are strict.
The two of you are in separate rooms and cannot exchange information. A
coin toss decides which of you will propose how to share the money. Suppose
that you are the proposer. You can make a single offer of how to split the
sum, and the other person---the responder can say yes or no. The responder
also knows the rules and the total amount of money at stake. If her answer
is yes, the deal goes ahead. If her answer is no, neither of you gets
anything. In both cases, the game is over and will not be repeated. What
will you do?
Instinctively, many people feel they should offer 50 percent, because such
a division is “fair” and therefore likely to be accepted. More daring
people, however, think they might get away with offering somewhat less than
half of the sum.
Before making a decision, you should ask yourself what you would do if you
responder. The only thing you can do as the responder is say yes or no to a
given amount of
money. If the offer were 10 percent, would you take $10 and let someone
walk away with
$90, or would you rather have nothing at all? What if the offer were only 1
$1 better than no dollars? And remember, haggling is strictly forbidden.
Just one offer by
the proposer: the responder can take it or leave it.
So what will you offer?
You may not he surprised to learn that two thirds of offers are between 40
and 50 percent. Only four in 100 people offer less than 20 percent.
Proposing such a small amount is risky, because it might be rejected. More
than half of all responders reject offers that are less than 20 percent.
But here is the puzzle: Why should anyone reject an offer as “too small”?
The responder has just two choices: take what is offered or receive
nothing. The only rational option for a selfish individual is to accept any
offer. Even $1 is better than nothing. A selfish proposer who is sure that
the responder is also selfish will therefore make the smallest possible
offer and keep the rest. This game-theory analysis, which assumes that
people are selfish and rational, tells you that the proposer should offer
the smallest possible share and the responder should accept it. But this is
not how most people play the game.
The scenario just described, called the Ultimatum Game, belongs to a small
but rapidly expanding field called experimental economics. A major part of
economic theory deals with large-scale phenomena such as stock market
fluctuations or gross national products. Yet economists are also
increasingly fascinated by the most down-to-earth interactions the sharing
and helping that goes on within office pools, households, families and
groups of children. How does economic exchange work in the absence of
explicit contracts and regulatory institutions?
For a long time, theoretical economists postulated a being called Homo
economicus- a rational individual relentlessly bent on maximizing a purely
selfish reward. But the lesson from the Ultimatum Game and similar
experiments is that teat people are a crossbreed of H. economicus and H.
emoticus, a complicated hybrid species that can be ruled as much by emotion
as by cold logic and selfishness. An interesting challenge is to understand
how Darwinian evolution would produce creatures instilled with emotions and
behaviors that do not immediately seem geared toward reaping the greatest
benefit for individuals or their genes.
Werner Güth of Humboldt University in Berlin devised the Ultimatum Game
some 20 years ago. Experimenters subsequently studied it intensively in
many places using diverse sums. The results proved remarkably robust.
Behavior in the game did not appreciably depend on the players’ sex, age,
schooling or numeracy. Moreover, the amount of money involved had
surprisingly little effect on results. In Indonesia, for instance, the sum
to be shared was as much as three times the subjects’ average monthly
income-and still people indignantly refused offers that they deemed too
small. Yet the range of players remained limited in some respects, because
the studies primarily involved people in more developed countries, such as
Western nations, China and Japan, and very often university students, at that
Recently an ambitious cross-cultural study in 15 small-scale societies on
four continents showed that there were, after all, sizable differences in
the way some people play the Ultimatum Game. Within the Machiguenga tribe
in the Amazon, the mean offer was considerably lower than in typical
Western-type civilizations (26 instead of 45 percent). Conversely, many
members of the Au tribe in Papua New Guinea offered more than half the pie.
Cultural traditions in gift giving, and the strong obligations that result
from accepting a gift, play a major role among some tribes, such as the Au.
Indeed, the Au tended to reject excessively generous offers as well as
miserly ones. Yet despite these cultural variations, the outcome was always
far from what rational analysis would dictate for selfish players. In
striking contrast to what self income maximizers out to do, most people all
over the world place a high value on fair outcomes.
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