The Ultimatum Game

[AbeSkray]

He's a moron in not acting in his own rational self-interest. He denied himself the prize money by making an irrational offer.

Your definitions of "rational" and "self-interest" are questionable.

If someone was offered $10 for doing nothing, it would be irrational and not in his own interest to reject the offer (unless accepting the money would somehow be a burden on him).

Taking $10 is a direct benefit to you -- it's greedy, in a sense. Rejecting $10 is only in your self-interest if the pleasure you'd gain from another's suffering is of more value than $10... which would classify you as a sadomasochist ...not that there's anything wrong with that.

I think it's doubtful that you're a sadomasochist. More likely, you feel the need to teach a stranger a lesson for dealing you a perceived injustice. I think that's a natural response, but ultimately futile. In my experience, trying to teach a faceless stranger a lesson is like pissing into the wind.

You're looking at it in absolutes. I gain nothing from $10 in my eyes so I rather piss on the guys insulting and moronic offer.

I don't think there's anything wrong with that! If I was having a bad day, I might flip the guy the bird and walk away, too. However, I wouldn't claim that I was acting in a rational manner.

In colloquial conversation, "rational" is often used to mean, "not crazy". In economics, "rational" has a stricter meaning. A rational actor is someone who will reliably act in his own self-interest given the information at hand and make decisions unemotionally. When I think of a rational actor, I think of Spock (Nimoy not Quinto).

I think Spock would accept $10 without question. Kirk, on the other hand, might take your route. Is Kirk wrong and Spock right? No! There's no right or wrong in this question. But only one of them is acting rationally (at least from an economist's point of view).

PS The fact that a rational actor is well represented by a fictional inhuman alien can explain why economists' predictions are sometimes way off base. Real people don't act rationally all the time! We're highly illogical.

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[BitterTea]

Is it rational to reward anti-social behavior?

[tomcollins]

Is it rational to reward anti-social behavior?

If you never see the guy again/deal with him again, is there any rational reason to punish him?

Punishing anti-social behavior is only worth the cost if you actually have to face the person again and deal with them.  Or someone you know and care about does.

And what makes it anti-social?

[NghtRppr]

If you never see the guy again/deal with him again, is there any rational reason to punish him?

Personal gratification.

[The Script]

Looks like I shouldn't have been so hard on chimps:

http://www.sciencemag.org/content/318/5847/107.abstract

They are actually smart enough to play the game right.

Likewise, you're not actually smart enough to understand that, for some people, revenge/spite has a nonzero utility.

Some of us are just in it for the lulz.

Dude, I agree with almost everything I've seen you write on this forum, but you have a really harsh way of displaying your opinions.  Not everyone who disagrees with you is dumb.  Tomcollins has proven he is intelligent and capable of putting forth some good arguments.  Just sayin

I think the only reason that b2c made that dig was because tom implied that those who didn't play the game his way were not smart. (see bold above)

Ah, insults all around.  Fair enough, then.

[TiagoTiago]

Is it rational to reward anti-social behavior?

If you never see the guy again/deal with him again, is there any rational reason to punish him?

Punishing anti-social behavior is only worth the cost if you actually have to face the person again and deal with them.  Or someone you know and care about does.

...

Even if neither i nor anyone i know will ever meet him again, i still would find it gratifying(sp?) to do my part, even if it's small, in making the world a better place.

[Grinder]

If you never see the guy again/deal with him again, is there any rational reason to punish him?

There is no guarantee that you would never see him again. Either way it's all about feelings (as estevo tried to explain to you). The minor good feeling I could obtain by receiving a small amount of money would not outweight the bad feeling of letting a greedy person get away with it. If you don't get that bad feeling that's fair enough, but the reason that most people do is that they have the genes that have been the winners in the game of evolution.

[tomcollins]

Is it rational to reward anti-social behavior?

If you never see the guy again/deal with him again, is there any rational reason to punish him?

Punishing anti-social behavior is only worth the cost if you actually have to face the person again and deal with them.  Or someone you know and care about does.

...

Even if neither i nor anyone i know will ever meet him again, i still would find it gratifying(sp?) to do my part, even if it's small, in making the world a better place.

How does it make the world a better place?

Would I make the world a better place if I rejected $10 because he was a fool and could have given me a penny?

[TiagoTiago]

With the guy receiving a lesson on not being too selfish we're one (small) step closer to having a world with more selfless people.

[tomcollins]

With the guy receiving a lesson on not being too selfish we're one (small) step closer to having a world with more selfless people.

What is "too" selfish?  What is wrong with being selfish?

[Alex Beckenham]

With the guy receiving a lesson on not being too selfish we're one (small) step closer to having a world with more selfless people.

Yuck. I can just picture all the rainbows and ponies.

The world will never be more perfect than it is right now.

[BitterTea]

With the guy receiving a lesson on not being too selfish we're one (small) step closer to having a world with more selfless people.

What is "too" selfish?  What is wrong with being selfish?

Other people don't like it and will punish you in social settings (like this game). Figured that was obvious...

[eMansipater]

All you people, optimising over a single variable.  Makes me think you don't understand yourselves very well.

[estevo]

I think the disagreement boils down to what different people find would be a fair split of the money.

I don't think there is much disagreement that if you had a good reason to spite the other guy, spending some small amount of money to pay back would be warranted.  tomcollins admitted as much in his reply to the (admittedly extreme!) question of vetoing the guy who killed his family.

So the real question is: should you have any reason to spite the other guy?  Which comes down to: is he being an asshole by asking for 99.998% of the money, or is it fair for him to do so just because he "can"?

There is a mindset --let's call it carebear; just a label, no ridicule intended-- that expects humans to display some sensitivity towards each other's utilities.  We are social animals endowed with empathy.  Morals are almost innate, common sense rules of thumb that make life better for everyone.  Equality is seen as a sane default, even in non egalitarian cultures.  An inequality must be warranted: someone worked harder, was smarter, or got luckier.

For a carebear, the fair split in the Ultimatum Game is an equal one (althought others may be pragmatically accepted), and the Splitter is being a jerk for trying to abuse his position.  He's failing the basic rule of "do as you'd like to be done to you".  Being put in the position to accept $10 is doubly indignating.  Not only is he trying to get almost all of the money, but he's relying on you being nice about it (the utility of the $10 themselves barely registers, in this context).

There is a mindset --let's call it cutthroat-- by which, at least when money is involved, humans are expected to behave as selfish aggressive maximizers in a game with only the most basic ground rules: basically, respect for physical integrity and property (some would argue that real cutthroats won't respect anything that can't be defended, but again, it's just a label, take it as defined here).  For the cutthroat, morals are there mostly to avoid physical violence, and behaving morally consists of refraining from theft and aggression.  Behaviors that a carebear would consider "abusive" and "exploitive" are not immoral unless mediated by violence or threat thereof.

For a --um-- throatcutter, the Splitter is just being logical so it's wrong to spite him in first place.  The destructive spiteful reaction thus seems doubly irrational.

Of course I'm simplifying a bit.  Barring that, any big objections so far?

[Grinder]

The world will never be more perfect than it is right now.

It's a lot better today than it was 50 years ago, so why do you think we have peaked?

[tomcollins]

I think the disagreement boils down to what different people find would be a fair split of the money.

I don't think there is much disagreement that if you had a good reason to spite the other guy, spending some small amount of money to pay back would be warranted.  tomcollins admitted as much in his reply to the (admittedly extreme!) question of vetoing the guy who killed his family.

So the real question is: should you have any reason to spite the other guy?  Which comes down to: is he being an asshole by asking for 99.998% of the money, or is it fair for him to do so just because he "can"?

There is a mindset --let's call it carebear; just a label, no ridicule intended-- that expects humans to display some sensitivity towards each other's utilities.  We are social animals endowed with empathy.  Morals are almost innate, common sense rules of thumb that make life better for everyone.  Equality is seen as a sane default, even in non egalitarian cultures.  An inequality must be warranted: someone worked harder, was smarter, or got luckier.

For a carebear, the fair split in the Ultimatum Game is an equal one (althought others may be pragmatically accepted), and the Splitter is being a jerk for trying to abuse his position.  He's failing the basic rule of "do as you'd like to be done to you".  Being put in the position to accept $10 is doubly indignating.  Not only is he trying to get almost all of the money, but he's relying on you being nice about it (the utility of the $10 themselves barely registers, in this context).

There is a mindset --let's call it cutthroat-- by which, at least when money is involved, humans are expected to behave as selfish aggressive maximizers in a game with only the most basic ground rules: basically, respect for physical integrity and property (some would argue that real cutthroats won't respect anything that can't be defended, but again, it's just a label, take it as defined here).  For the cutthroat, morals are there mostly to avoid physical violence, and behaving morally consists of refraining from theft and aggression.  Behaviors that a carebear would consider "abusive" and "exploitive" are not immoral unless mediated by violence or threat thereof.

For a --um-- throatcutter, the Splitter is just being logical so it's wrong to spite him in first place.  The destructive spiteful reaction thus seems doubly irrational.

Of course I'm simplifying a bit.  Barring that, any big objections so far?

I liked this post a lot.  I don't think anyone has any moral duty to me other than not to steal my stuff/cause physical harm/defraud me.  If my sister wins the lottery, she is under no moral duty to share any of it with me (although it might be nice).  If I get myself into trouble, no one owes me by bailing me out.  If they do, great.  I do not consider the person dividing the money to have any moral duty to me to share anything.  I would graciously accept anything he chooses to offer me.

The key definitely where you set the baseline of fairness and moral duty.  The trick is to mislead the reader into thinking that the money should be equally split.  By phrasing it as "they have money together to split" is a great way to trick the reader into thinking that each player has an equal claim, and taking any more is stealing.  But it's not the case.

The logic of some people is truly frightening.  If someone does something "foolish", they deserve punishment!  I would hate to be a neighbor of such a person, where I might do something they consider foolish, and they retaliate by burning my house down or slashing my tires since I "deserve punishment".  Or if I won the lottery or came across a large sum of money, if I did not share it to their liking, I would be worthy of their wrath.  I would suggest a career in government where they would fit in with other thugs.

[TiagoTiago]

A variant of this game that favors a more equal distribution, i dunno what it's called,  was somthing i learned when i was a kid, it works kinda like this there is only one big slice of cake left and two kids, to make them both agree it was a fair distribution of the end of the cake, you ask one of them to cut  and the other to decide which kid gets which piece, letting both know their roles beforehand.

[Gabriel Beal]

I know this thread is a month old, but I did my masters work (years ago) in the ultimatum game.  It would have been so useful to have Bitcoin to conduct the experiments over the internet.  The only problem would be the sample would have been so skewed towards people educated in logic/mathematics/computer science.  Although, that kind of education isn't as strong a predictor of choice as you might think.

[luv2drnkbr]

The answer for me would depend on my knowledge of the person who can reject the offer.  What is his financial situation?  What non-financial motives might drive his choices?  If it's some random off the street I offer him not a 50/50 but enough that the monetary reward would likely overcome his "spite" reaction to my getting more.  Like maybe $4200/$800.  If he's a purely rational actor, I'd still give him $50 just because I'm nice, but not THAT nice.

If I'm the one able to reject the offer, I try to find some way to convince the other guy that I'm moderately well off and very vengeance-oriented.  Then (whether or not I have been able to communicate this to him) I accept any offer.

[Anders]

I read this interesting experiment from The Origin of Wealth, a book by Eric B. Beinhocker (paraphrased):

Imagine that a stranger proposes you and me the following deal.  She will give us 5,000$ if we can agree on how to split it.  It works like this: I choose a split and you don't get to negotiate it, you can only accept the deal (in which case each of us gets what I chose) or reject it (in which case neither of us gets anything).

After giving it a short thought, I propose that I get 4,990$ and you get 10$.

Would you accept the deal?

(I'm not asking what you think is the rational thing to do from either a selfish or political standpoint, but what would you actually do.)

I depends on the overall situation. Not only for me, you and the person giving the money but also on the rest of the external world. Such decision has to be made, not only with a greedy mind, but also with the heart. Not with mushy selflessness. Being selfless is as bad as being selfish. We have to ask ourselves: what is the potential for love in this deal?

Eckhart Tolle often talks about this broader state of awareness: http://www.youtube.com/watch?v=1DgPaoObetE