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Re: the handicap principle

Posted by baseball55 on March 29, 2018, at 20:53:33

In reply to Re: the handicap principle, posted by alexandra_k on March 29, 2018, at 17:33:44

> I am interested. But if you are bored of it, then don't feel obliged.
The ultimatum game was developed to test what was the basic assumption of economics - that people rationally pursue their self-interest. Two strangers are paired together. One is given a sum of money (say $20) and must offer some amount (anywhere from $1-$20) to the other person. The second player can accept or reject the offer. If the second player accepts, the money is divvied up in accordance with the first player's offer. If the second player rejects the offer, neither gets anything.

If people were driven solely by rational self-interest, then it would be in the first player's interest to offer as little as possible and in the second player's interest to accept any offer (since even $1 is better than nothing). In reality, first players generally offer slightly less than half the money. Offers less than this are generally rejected by the second player.

The implication is that first players don't want to be perceived as cheap (this also applies to tipping - why tip a waiter you'll never see again AFTER the meal has already been served? Because people don't want to be thought of as cheap). Also, that second players would rather get nothing themselves than reward a cheapskate.

Interestingly, I read a study years ago of bonobos. When one bonobo was given some grapes and the other was given cucumber slices, the second would throw the cucumber slices on the ground - not fair.

The conclusion is that people care about fairness, even when dealing with strangers they will never see again.

> Is this sort of leading up to the idea of reputation?

Not exactly, because the players don't know one another and won't continue playing with each other or with new players.
> I remember hearing that modern group size is large and people move around the globe such that there is less consequence for freeriding / cheating / defecting than there used to be. Apparently, psychopaths / cheaters / defectors / free-riders are more common, now? Or psychopaths are running the show? Something along these lines...

This is probably true, though there have always been those curmudgeons who try to free-ride or cheat others - even in small towns they exist. I've always found it interesting that most people are cooperative in most face-to-face settings. But put people in cars and watch out! In cars, people routinely try to cut in line, yell and curse at anyone who isn't moving fast enough. Nobody does these things on sidewalks. People also act badly online and many do and say things they would never do/say in a face-to-face encounter.




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poster:baseball55 thread:1097495