A situation somewhat similar happens on Deal or No Deal. Let’s say there’s five cases left: 1 million, 500,000, 100, 5, 1. The banker offers you $170,000.
Now if you know math and EV you know the correct amount of your offer should be $300,000. You’re getting screwed out of $130,000!
If you don’t know math or EV, you still know there’s a million dollars up for grab. Why in the world would you take that lowly amount when there’s a MILLION DOLLARS!!!
But while playing the game, here’s what never dawns on these two groups (or these two groups willfully ignore): That’s $170,000. For free. No strings attached. In terms of money invested it costs you literally nothing to say yes to the deal, even if you feel it’s an unfair offer. But people want to keep playing on.
But of course this assumes that the decider knows what you will and will not accept.
If this were a strictly one-time deal, the best bet would probably be to make the decider think you would accept nothing less than %50, but then accept any offer at all. After all, you’re never going to interact with the players again.
However, if you think there’s a chance you will, you’ll have to play off how much you value being perceived as honest (or dishonest which sometimes has value as well,) versus how much you think the decider is willing to accept and thinks you will accept.
js_africanus, I’ll see what I can do with articles. Feel free to remind me by email if you’ve heard nothing in a couple of days. My wife’s a barrister who does a lot of planning work, and I reckon what pisses people off most in that field is thinking their objections have not been given serious consideration. When they hear that their concern have been given a serious airing but the local law says they’re screwed they seem less outraged.
Little Nemo, I quite agree. Of course, the problem’s set up to bring these issues into sharp focus. Ludovic’s post is mainly about looking into the other guy’s eye’s and saying “I’m the kind of guy who will leave money on the table if you try to fuck me over”. But once you’ve failed to convince him, will you actually leave the money on the table?
And as for Enderw24 and “Deal or No Deal”, all I can say is that there are lots of economists talking to the producers in various countries. It’s an experimental economics game with a much higher budget than most folks I know can afford in their own labs. Interesting things are being learnt, and most of them are not good for expected utility theory - which is thought only almost mostly dead by many economists.
This is just so friggen bizarre to me. I sat there staring at the OP for about 5 minutes, trying to figure out “the catch”. Wait, do I have to give the other guy money? Wait, is the money payment for something? Wait, where’s the string? It never occured to me that I might want to “punish” the other guy monetarily.
So I’m cynical enough to be wary that someone else might be looking to screw me, but it never occured to me that I could screw someone else.
I think I rather like what that says about me, frankly.
I don’t really have a “punish” reflex in me. But, hawthorne’s link kind of gets at that. It’s easy for me to believe that areas of my brain just fire differently than other peoples. Just like I’m shorter or taller or faster or slower than others.
Saying “I’d indicate to the person I won’t take less than ‘such and such’” is kind of a cop-out. Yeah, we’d all do that if this were reality. Put yourself in the experiment.
WhyNot, Trunk…we have the makings of a club here. Of course, we’ll never be able to afford t-shirts, because we keep letting others have all the money, but still…
Suppose there is only the person sitting on the bench and you. He offers you a dollar. Would you accept it?
Why would the fact that he is getting “more” than you change whether you accept free money? The amount you receive is out of your control, you only control whetther you get money or not.
According to this abstract the average offer was 40%, and 16% of offers were rejected - based on a study of 37 papers describing 75 experiments. This abstract compares men and women, and finds that women make bigger offers and accept more. You need to be registered (and pay) to get the full paper.
IIRC, Thaler had a mean of about $3.50 in his experiment.
Oddly enough, I lead off a paper I’m presenting in a few weeks with the Ultimatum Game. The paper is about the application of behavioral economics to engineering. The recent New Yorker article on neuroeconomics talks about experiments where people play the ultimatum game in MRI machines. It seems the reason for the result is that two parts of the brain are in conflict, and the lower the offer the more activity there is in the part that wants to reject the offer due to unfairness. Interesting stuff.
You’re making the common fallacy that occurs in games like Prisoner’s Dilemma, the Martian’s Box, the Black Ball Lottery, and this - you’re acting as if everyone else’s responses are included in the statistics but your individual response is a free choice that is neither affected or causes effect.
But everyboy’s actions, including yours, are included in the statistics. Using Voyager’s figures, you’re either part of the 16% rejecters or you’re part of the 84% accepters. But you can’t say “I’m part of the rejecters in order to maximize my percentage but at the last second I’ll actually accept to get whatever I can get.”
Now obviously, the specific situation described in the OP is unlikely to ever happen in real life. But analogous situations happen all the time. And all of us are participating and watching and forming our opinions of how other people will act. So if you’re ever confronted with an actual offer like the OP, you’re going to have a rough estimate, based on your life experience (including reading this thread), on how the other guy will act. Are the odds better that he’s going to be a rational person like you or a stubborn bastard like me? How good or bad an offer will tip him one way or the other?
Well, you’re right Little Nemo, but there’s still a bit in what Ludovic says. Clearly there’s faking going on. Some people really are committed and some are just pretending. That some people make non-Nash offers and that some offers are rejected suggests that there is some faking going on and that not everyone is successful (in a face to face setting) in communicating their intentions. Maybe one way of faking is having this rather paradoxical idea in your head - “I’m part of the rejecters in order to maximize my percentage but at the last second I’ll actually accept to get whatever I can get.” You could hold onto that if the two ideas were held by different parts of the brain struggling for control. And it might be a pretty good way of faking.
That depends on the parameters of the game. If it is set up so that I cannot lead them to believe I will reject (such as by verbally threatening to beforehand,) then I can greedily be just one person who takes advantage of everyone else’s “fairness reflex” and accepts anything. Yes, I lower the statistics somewhat, but if this is truly a one-off situation the amount I lower the statistics is so infinitesimally small that the EV, even taking into account the amount I change everyone’s expectations, would be positive by accepting anything.
It also leads to a better EV to accept anything even without bluffing. You also do this by exploiting everyone else’s “fairness reflex”, although in this case the other person does not know whether you will take a high or low offer.
If this is part of a long-term game with limited number of participants, then obviously your actions will help determine the deciders’ offers, but not if it’s a one-off which can be considered just a part of every other one-off game of the same sort that has ever been played.
Santiago Rusiñol and Rubén Darío did something similar. They made a bet, which Rusiñol won. The bet was about selling duros (5 peseta coins, back then a large amount) for 4 pesetas: Darío said people would buy them, Rusiñol said they wouldn’t do it because they’d assume the duros were fake or something, people would expect an unseen catch.
The bet took place in Catalonia; Rusiñol was catalan, Darío chilean. Catalans have a reputation for being more money-obsessed than Uncle Scrooge’s McDuck relatives: my mother’s family certainly lives up to the reputation. It may have played differently in a different location.
When the peseta still existed, Gramps would always offer to trade children 4pta for 1 duro. Little kids fell for it, but of course there came a point when you figured out that this was a case where “1” was not smaller than “4”. Funnily enough, the one cousin who took longest to figure out the trick is the one who ended up becoming an accountant.
Can’t find linkies in English of course, but the expression “nadie da duros a cuatro pesetas” is now commonplace in Spanish. Those of you who can read Spanish can find linkies to the story googling “duros a cuatro pesetas” + Rusiñol but the ones I find are pdf or have horrid colors.
This isn’t strictly related to faking, but it’s something that I’ve noticed in local politics. I call it “strategic stupidity,” and it involved adhering to a belief, no matter how ridiculous, because it improves the odds of getting what one wants. As explained in Thinking Strategically, “the squeaky wheel gets the grease, but the stuck wheel gets more.” Their example was France keeping Britain out of the EU, IIRC, by being completely intransigent.
In the case of strategic stupidity, it may pay to hold an outrageous belief, since that moves the acceptable negotiation outcomes closer to one’s own position. I don’t necessarily think it is a conscious (sp?) choice on the part of the actor, but may be a reason for unconsious truthiness.
This is just a casual observation on my part, of course, that I came up with to try to explain how people could believe or think things that don’t comport with reality, (or sometimes, even their best interests). Oh, and hawthorne, if you like the idea, credit me when you publish it!
It’s been done, I’m afraid. I posted a thread when Schelling won the Nobel-like prize last year that has a flavour of his stuff: I hurt anyone who fails to help anyone who helps me. IIRC, Jon Elster’s books on commitment, imperfect rationality and the subversion of rationality Ulysses and the Sirens and The Fox and the Grapes both talk about that stuff a fair bit too.
