A man of comfort can afford to play the ‘punish the unfair’ game.

The less affluent a person is, or feels, the more likely they will accept an unfair bargain because they have an immediate need to be fulfilled. They realize their is no long term benefit if they cant survive the short term.

Example: It is far easier for a pawn shop to charge usury rates of interest as opposed to to bank simply because of the clientèle.

The more need we have the more likely we will make decisions that resemble that of need satisfying ape. I would be curious to see if a well/overfed ape would act more human like.

In the bare bones ultimatum game the players play once and can’t communicate.

In situations where Player 2 can talk before the division is made, there are much fairer results. “If you don’t give me 50/50 I will reject it.” forces the choice back on the divider.

Also, when the game is played multiple times the assumptions is that humans will reject the offer in order to get a more beneficial future offer.

The ultimatum game played with these two conditions represents (more closely than the original) relationships like long-term vendor-customer, or employer-employee.

I’d like to try

1. Original game (control)
2. Original game, but the instructions are presented like this “Player 2 will be deciding whether or not you both will get this money. Player 1, you must split the money between the two of you, and ask Player 2 if he/she accepts the offer. If he/she does, then y7ou both keep the money. If not, you both get nothing” to see if a change in the perception of power will change the split.
3. Play the original game with original description, expect tell players they will be playing multiple times.
4. Play with description from #2 multiple times.
5. Allow players to communicate during the division process (original description)
6. Allow communication with description from #2.

Another fun way to flip the power would be to impose a real world relationship in reverse circumstances. “BigName inc. wants to offer you a job. Please list your desired salary here. If the company feels it’s a good salary for you they’ll hire you. If they reject your offer, you won’t get the job.”

Another fun version would be a collective bargaining model of the game, where a “boss” declares a split for many individuals at once, say 10 individual deals at a $9/$1 split. The experiment could be run where the “workers” (the ones being offered the deal) hear what each others’ deals are, and a third version where they can communicate with each other.

I think that these experiments would give valuable insight into how an employer can keep employees happy, and how far employees can expect their peers to go in a collective bargaining setting.

I do agree with you that a different perspecitve–seeing long-term effects should this type of option continue–can be viewed as rational as seeing it as a short-term gain. So it’s not effectively “punishing”, but merely taking into account future possibilities and mutuality considerations. (at least that’s what i thought you were trying to say!)

What I found, however, was a very fun ride through everyday human experience, which may or may not help inform me as to how to take an esoteric risk assessment and make it truly accessible and understandable to the public.

I also have a couple of observations I’d like to share. The first is with respect to the typical reaction to “FREE!” Throughout the discussion of our obsession with “FREE!” I felt like something was missing.

In the end, I came to the conclusion that assessing the net benefit from an interaction does not adequately capture the (subconscious) calculation we make or should make. There are two distinct calculations going on: 1) How much pain will I have to endure (what will it cost me), and 2) How much pleasure will I get (what will I gain), and the “net” result does not seem to be determinative in our decisions. If there is no pain (no cost), that’s a completely different equation than one where there is some pain (cost). That is to say that if there is no cost, then there is a guaranteed net benefit, so why take the risk of incurring a negative balance by making a choice that incurs some cost (however small).

In the Hershey kiss vs. Swiss Chocolate, I thought, if I had to choose between 1 shot (stick of a needle) to get a Kiss, and 2 shots (sticks of a needle) to get the Swiss Chocolate, I’d take two, because once I have one, two means nothing, but if I have a choice of no shot (no pain, no cost) for a Kiss, and only one shot for the Swiss chocolate, I’d take the Kisses every time. I don’t care about the “net” benefit. The fact that one option has no downside always means it is a net positive, and it doesn’t matter that the alternative is a “higher” net positive. When there is no pain (cost) that’s always a win.

The other comment I wanted to make was with respect to the section on “social norms” vs. “market norms.” I actually have two personal observations here: 1) if I’m paid to do something, I’m obligated to do it; I have in some ways given up my free will in exchange for money, and this makes me feel like I HAVE to do it, even if I no longer want to, which I don’t like; and, 2) if I do something for free, out of love, concern, empathy, sympathy, altruism (if such a thing really exists), then it is “priceless,” and to put a price on it demeans it.
The second point is brought home by the Mastercard (TM) commercials: 1) Turkey, $.99/lb, 2) cranberries, $1.10/bag, 3) Sweet potatoes, $.45/lb, 4) the love grandma put into making the dinner…priceless. Please don’t try to pay me for that, because (as the Sensai master says in Chapter 4, if I charged you for it, you could not afford me.

Anyway, I loved the book. And, if you also liked it, might I suggest trying “The Drunkard’s Walk: How Randomness Rules our Lives.” It’s a statistical perspective on our conjoined lives, and just as interesting (in my opinion) as the perspective shared in “Predictably Irrational.”

Sincerely,
Barbara L. Hamrick

Imagine playing the ultimatum game over and over again. The chimp in the experiment might accept that single raisin every time. After 100 plays, it would have gained 100 raisins. A human player would refused to take anything less than $3 of $10 dollars would stand to get a much greater gain (assuming that the other player was rational!) — the first couple of rounds, both players might get nothing, but then the other player would likely increase the size of the gift (purely out of self-interest), and the original player might end up with around 95 x $3 = $285.

(Imagining myself playing the game, I’d probably start accepting $4, and then part-way through I’d stop, and accept only $5.)

Cate:

Who had the original $10 in your example with your child? If you were simply keeping $9 of your own $10, that’s a very different example, and accepting the $1 is a no-brainer. If your child refused the $1, what would have happened to the $10? Presumably, you would have kept it all.