Nowhere in traditional economics is it claimed that there is no utility in non-material things. Forget Hollywood - you’d be claiming that prostitution shouldn’t exist. The utility of things like Hollywood has nothing to do with this example.
Once again, you keep repeating this assertion, but you never actually support it with anything.
How is it adjusting to state what is observed in reality? Why is it adjusting to say that people want subjective returns, but not adjusting to say that people want money?
Quite simply, what’s your evidence for this oft repeated assertion that people are adjusting? I’ll ask you again the question that you ignored above:
Were the players really told that their goal was to “get as much money as possible”?
Because if they weren’t told that, then that wasn’t the basis of the game at all. It is an unwarranted assumption on the part of the researchers.
And if they were told that, then all this demonstrates is that people are capable of cheating. Anybody who isn’t severely mentally retarded knows that “anything” is greater than “nothing”. So every player knew that, in order to follow the rules they had been given, they had to accept the offer. IOW the players who rejected the offer were deliberately breaking the rules for their own benefit, ie cheating.
I let you dodge this the first time because then it was mostly a sideline. But now that you have repeated these claims of adjusting multiple times you really need to answer. Can you please provide evidence that the players were told they had to “get as much money as possible”.
Because if the players weren’t told that, then your assertion that they just want money is “adjusting” even more than our assertion that they wanted more than just money. At least our assertion is based upon observation.
And if they were told that then quite obviously they were deliberately cheating and the results are utterly meaningless. As you said, the game itself makes tic-tac-toe look deep.
I am. Turning down the one penny does not maximise your reward, because the Ultimatum game is a one-time game.
The timeline is as follows:
[ol]
[li]Player A assesses prior knowledge of his opponent (if any).[/li][li]Player A makes an offer.[/li][li]Player B accepts or rejects.[/li][li]END[/li][/ol]
The decision made at Step 3 cannot affect Step 1, unless you are playing multiple rounds. It is therefore always in your best interests to accept the offer made in the last round, because your decision will not affect whether the other player thinks you will accept the offer, until it’s too late.
Your response is precisely what is predicted by classical theory, and what does not happen in real life.
- Some *researchers may it only consider monetary returns, but the game itself allows for subjective returns such as justice, charity, revenge or pleasure.
So while I agree with you that it’s basically a sucker bet, I think it’s even worse than you suggest. Not only was it engineered as a situation where people will do badly, a researcher still needs to ignore most of the rewards available to make people do badly. Any researcher who is able to assign a value to justice, charity etc finds out that people in fact do perfectly well even in this situation engineered to make them do badly.
We really are clever, rational little monkeys.
Real life has multiple rounds.
It has its place because Little Nemo has said that according to “the” rational economic theory, the utility of non-material things is an “unneeded complication”.
I invoke Hollywood in order to get agrementon two points that I would have thought were fairly non-controversial.
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Non-material things do indeed have a utility in the real world and
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Such utility is a necessary complication in any rational model of economics applied to the real world.
If Little Nemo’s narrow reading of his model does not or will not allow such utility then it’s fairly obvious why it produces a paradoxical result when applied to the real world
I invoke Hollywood because its economy is huge, above board, it demonstrably works and we all take part in it literally daily. So it’s better than prostitution for my purposes in this debate.
I think it’s nearly certain that the players were told the conditions of the test.
However, it’s also very possible that they didn’t internalize them - that they kept notions of victory that failed to ignore how much cash the other guy got. And if they did, then a rational person would reject a badly unfair deal, because in the real world it is rational to reject such deals and irrational to accept them. The game is messing with people’s minds, in other words.
I would hestiate to call this ‘cheating’ as it’s totally the wrong word for it, though. These people are playing by the wrong rules and then failing to win as a result. That’s not brilliant, but it’s not cheating either.
That’s as far as the discussion goes when talking about the second player. However things may be different when talking about the guy dividing the money, because he would be perfectly rational to keep in mind that the guy choosing might not be clinically analytical or properly following the rules of the game!
Even if a person is aware that their best choice in an optimal situation would be to offer the other guy only one penny, this is only the optimal choice if the other person accepts it. Which they only will if they fully grok and internalize the notions of the test and become Spock and discard all emotions. Which they won’t. So you’d have to be an idiot to offer only a penny. The rational choice would be to them offer the lowest value that they will accept. Which, with your own money on the line, would be the lowest amount you can be reasonably certain they will accept. 50/50 is almost perfectly safe in this regard, with values close to it fairly certain too. The further away you get from it, though, the worse your odds are.
So - a perfectly rational man would take the penny. But no rational man would ever offer it.
I’m not talking about the *conditions *though, I am talking about the instructions. Very different things.
Did the researcher actually say the words “Here are the conditions, the one rule is you must get as much money as possible”? Or did she simply say “Here are the conditions, do as you see fit?”
Because if she said the former then it is quite clear that the players were deliberately cheating and the results are completely invalid for that reason alone. A Little Nemo said, the game itself makes tic-tac-toe look deep, so any player will know how to get the most money. If they didn’t accept the offer they were deliberately refusing to follow the rules for some benefit of their own. ie cheating.
And if she said the latter then Little Nemo’s assertions that the players were trying to maximise monetary returns are even more “adjusting” than our assertions that they wanted more than just money
Well I like to think I’m rational, and I wouldn’t accept the penny. As others have noted, it’s effectively valueless, and as Boyo Jim notes, I’d pay TWO cents (actually throw in one of my own) to screw the other guy. It would give me pleasure to screw the other guy because he’s either a lousy cheapskate or thinks he’s far to clever.
And it’s no more rational to want a valueless disc of metal than to feel good about screwing someone I don’t like. As I said above, neither of these is rational, what it comes down to is what an individual values. For me, I’ll pay 2 cents every time for the kick I get from screwing the guy.
It is only when I have been given a hard and fast rule that I must obtain the maximum amount of money that it becomes rational to want a worthless disc of metal.
I an quite certain that they were told that the point was to get the most money. They might not have cared, but I’m quite certain that’s what they were told.
And it’s not cheating unless they break the rules. Having a goal that’s poorly aligned with the official victory conditions isn’t cheating. Breaking the rules, like by colluding or negotiating with the other player, that would be cheating. Get it right, please.
You may be rational but you’re not perfectly rational. Not Spock rational. And certainly not “rational according to the test definition which explicitly states that maximizing your money is the single goal” rational.
Thing is, though, the point I was making is that while the OP was correct in saying tthat that the second isn’t Spock-rational when he turns down the penny, he was wrong when he said that failing to offer the penny is Spock-irrational, as is manifestly proven by the fact that some people were turning down pennies. I wonder if the book he was referring to got that wrong too?
I have got it right:
cheat (cht)
v. cheat·ed, cheat·ing, cheats
v.tr.
- To violate rules deliberately, as in a game: was accused of cheating at cards.
If the subject was told that the only rule was to get as much money as possible, and they then deliberately violated that rule, then they are, by definition, cheating. And given the simplicity of the game it’s hard to argue that they didn’t know how to get the most money.
Next time please check a dictionary before telling other to “get it right”.
So now the test has to define what rational means, specifically excluding all non-material gains from being rational, in order to make decision irrational. As I said above, if we applied the same thing to the real world then the whole Hollywood economy is irrational. It offers no material gains at all.
At this stage the trial has become so divorced from anything resembling the real world, and is so clearly afflicted by cheating, that it can’t possibly have any relevance to the utility of the theory to the real world.
Of course a Spock rational person wouldn’t *accept * the penny either. Why would a Spock rational person want a lump of metal? It isn’t rational to want a lump of metal.
And that is exactly what we find in the real world. People who suffer brain damage that affects their emotional centres are unable to make any decisions at all. With no emotional drivers there is no point in having a lump of metal any more than there is a point in having a leaf. People only seek money because either it gives them pleasure in itself or it allows them to purchase things that give them pleasure.
And this has been my point from my first post. Desiring anything is irrational because someday we will all be gone. It’s not rational to want shiny rocks. The best we can say is that it is more rational to want food when you are hungry than to want money, because the foods gives pleasure. But once again, the ultimate driver is that irrational pleasure.
The idea that a Spock rational person would accept the penny is without basis. People do whatever gives them the biggest endrophin hit, ie whatever gives them the most irrational, purely emotional boost. A Spock rational person, if forced to play the game, would be as likely to reject the penny as to accept it, since either outcome is equally devoid of emotional, and hence any, value. Spock might, if forced, flip a coin to decide whether to accept or reject, but there is no rational method of deciding between the two choices.
It is only by defining a priori that rejecting money is irrational that we can declare that people rejecting the money were acting irrationally. IOW it all hinges on perfectly circular reasoning. If we use any other definition of rationality at all then rejecting the money is just as rational as accepting it.
Little Nemo, suppose you and I are playing the game. We’re going to play once, anonymously, and we’re never going to (knowingly) have any interaction together ever again.
I offer you a penny.
Why not take it?
Were they told that there is a rule which requires them to try to get as much money as possible, or were they told that the winning condition is to get as much money as possible?
If there really was a rule that required them to try to get as much money as possible, then someone who didn’t try to get as much money as possible would be cheating.
But if they were told simply that getting as much money as possible is the winning condition, then it wouldn’t be cheating not to try to reach that condition. I don’t break a rule when I deliberately decline to checkmate my opponent.
Pennies are worthless. I can’t remember the last time I used one. They are more of a nuisance than anything.
Offer me a quarter, which I might actually use, and I would take it (within the rules of the game where by definition there can be no benefit to not taking it. In real life I would want to discourage such offers).
And in this case all the researcher has done is done is establish an arbitrary and irrational condition of “win” and then arbitrarily and irrationally declared that any rational person must want to “win”.
The scenario is now so divorced from the real world that it tells us nothing at all about how your theory fits the real world. The researcher has explicitly told the subjects that it’s nothing but a game with a meaningless and arbitrary ending, and then acted surprised when the subjects treated it like, well, a game with a meaningless and arbitrary ending. Trying to apply the results of such a game to how people might behave in the real economy is silly. We might just as well test the theory against a D&D game.
As you note, people choose not to win games all the time. That’s not irrational because it’s just a game. The only reason to play the game in the first place is because it feels good, so if it feels better to lose than to win, then of course people are going to lose. That’s the only rational thing to do. Saying that it’s irrational to maximise pleasure from a game is, well, irrational.
There seems to be a lot of confusion here about exactly how these trials were conducted. Little Nemo seems to be saying that the players were told they had to accumulate money. You are saying that they may have been told it was just a game with an arbitrary win condition. I suspect that they were told the conditions but not that they had to win/accumulate money.
Does anyone have references to the original research so we can settle this issue?
Just to clarify, I’m not saying that–I was just asking whether that’s what happened. So:
I’m interested in this as well.
Isn’t the situtaion more aptly described as involving subjects who treat the game as though it has more significance than what the researchers specified? I.e., isn’t the implication that the subjects apparently treat the game as though it had consequences beyond the single play constituting the game, despite being told this isn’t the case?
Depends how you look at it.
My view is that, according to your suggestion, the player shad an arbitrary, meaningless and irrational win condition imposed on them, that being the acquistion of the most money. Even though they were explicitely told they could never be playing *against * anybody. And that they had no control over how much they could possibly win. And that the only real choice was “the amount on offer or nuthin’”. Despite all that, they were told that if the got “the most” money they would “win”.
As games go this is even less enthralling than two-up. The player has no actual stake, they have no ability to decide their risk, there isn;t even any element of chance or risk. The only condition for a win is that the player says the word “yes”. Literally, that’s it. If you say “yes” you win. If you say “no” you lose. I guess it;'s kind of like “one-up”, but played with a double headed penny.
How could anybody treat this lame arsed “game” with respect? The only way it could be treated with any seriousness is if you actually gave a shit about the amount of money being offered. Otherwise the only rational thing to do would be to have as much fun as possible after being made to sit through the joyless “two headed one up rules”. Now if you were offered 20 bucks maybe it would be rational to maximise your fun by taking it and buying some brews. But if you were offered a penny the only possible way to get any joy out of it would be to screw the other guy. A penny won’t buy any fun.
You don’t need to suppose any conditions beyond a single play for all that to be true. Perfect understanding and acceptance of the conditions would lead to that behaviour. Quiet simply you’ve wasted your time coming here because the game is utterly joyless. The only possible return is some fun you might get from your decision, because you know you’ll never get another chance to play. So if the fun derived from the money is more than the fun derived from screwing the other guy, then you accept the money. That is the only rational way to look at this.
The researcher who tries to imply that this has some bearing on microeconomic is playing with herself. In microeconomics people make decisions that have actual consequences, not pointless “win” conditions. All that this trail, under the conditions you suggested, could tell you is how people react to meaningless, joyless “games”. Unsurprisingly a theory put forward to model economics fails when applied to this.
I do get your point, that people could be construed as acting as though their behaviour would affect future outcomes. But I don’t know how such a claim can be justified.
the first objection is that, as I noted above, even with perfect understanding I’d still spend a nickel to screw over a smartarse or cheapskate. That’s a rational, informed decision on my part. It’s no less rational than spending money on a movie ticket.
The second objection is that, as others have noted, the game isn’t played in a true vacuum. Despite being told that you only get to play once, we all know that similar situations occur all the time. We have a social structure that demands that we reprimand those who are unfair, even i at personal cost. Saying that we can’t play this game again is meaningless.
Just to give a real world example, the hookers and blow example I gave above isn’t far from the truth. Years ago a housemate asked to borrow my car, and then used it to go to a yard sale where the parents of some kid at college were selling all his roleplaying books for, like, 10c each. Never mind how the kid probably felt when he found out his $20 books were sold for 10C, I was pissed because the housemate never told me or asked me to go with despite knowing I would be interested. As in the game in the OP, neither of us had a right to this windfall. I got the fuel money I was promised, so I was ahead. But needless to say I was still pissed off.
My point is that life throws situations potentially similar to this at us all the time. The reason that most people don’t act like my arsehole housemate is that they know that they will get shafted. In that case, had I known I would not have loaned my car, even though I would have lost money as a result. I’d rather take the $5 hit than give the arsehole what he wants. We rarely have the chance to ever see these *specific *opportunities again, but we see similar opportunities regularly, and it is in our interest as social animals to shaft people who act unfairly. Or as someone said up thread, this is actually the billionth iteration of this experiment, not the first, and I would add that there will be other iterations for all participants.
So acting as though it it had consequences beyond the single play constituting the game isn’t irrational, it is a fact.
Blake, I feel you’re overthinking this. Here’s the situation as I see it.
The ultimatum game exists. I described it in the OP. It’s a very simple game with no hidden depths.
Basic economic theory (the Homo Economicus model if you want a name) predicts how it will be played. It predicts what the players will see as the goal of the game and it predicts how both players will act to achieve that goal.
The game has been played repeatedly, with numerous variations. Because of these variations, the outcomes have not been identical in all games. (And all outcomes are usually the averages of various plays.) But the outcomes do not match the predictions described above.
That’s it.
Now you can argue the game was poorly designed. But it doesn’t really matter. The game is what it was and the predictions were made based on that.
And you can argue about what the outcomes were. Again, it doesn’t matter. The issue is about the predictions that were made not what you or anyone else thinks the predictions should have been. It’s great if you predicted the outcome. But the Homo Economicus model did not.
I assure you I’m not overthinking the situation. It is you who have oversubscribed to the model. Your OP actually tries to ague that irrationality os the rational choice because the model says so. But it has been demonstrate din numerous ways that this is not so, and that the model doesn’t actually reach any such conclusion.
At the very best all you can conclude is the following:
If a deliberately limited and simplified model is applied, via a game with arbitrary and joyless rules, to a situation in which rationality is arbitrarily, irrationally and with great circularity defined as being the irrational acquisition of wealth, then the most rational outcome is achieved via a irrational tactic.
Yes, and if I call a tail a leg then a dog has five legs, and if a frog had wings it wouldn’t bump its arse on the ground when it hopped.
All of this tells us exactly nothing about the real world or how people think. It’s just semantic nonsense coupled with a healthy dose of masturbatory research. In the real world the rational outcome is achieved by rational choices.