The Ultimatum Game

Great news – Society exists! We’re not just self-serving individuals with no sense of collective responsibility, the Ultimatum Game proves it.

The Ultimatum Game is a very simple social economic experiment. A group is divided into pairs, one player is given £10 and told to share it with their partner with a one-time offer. They can share as much or as little as they like, but if their partner refuses the offer both leave with nothing. After many transactions the group then has an average figure of successful, i.e. accepted, transactions.

Obviously, if self interest we’re the only motivating factor in a decision like this, the offer would always be as little as possible – £1. But this is not the case as offers of £1 are almost always rejected. More typically the offer is £5, i.e. a 50/50 split, and the average is around 40%. This is because the decision maker knows that if they were in the recipient’s position, they would be inclined to reject the offer if they considered it greedy.

The psychological principle this is proving is that people are prepared to sacrifice their own gain to punish another’s greed, which is, in the most abstract form, a sense of social responsibility.

Also, in an interesting extention of the experiment, if the allocation of giver and receiver is not decided randomly, but instead the person offering “earns’ their position from outperforming the other in a simple test, the average offer accepted is generally much lower. This indicates that most people will not only punish greed, but also reward achievement, and are prepared to make sacrifices to do it.

Interestingly, perhaps predictably, this second version of the test varies culturally, with the average accepted offer being at it’s lowest in America, where capitalism is at it’s most rampant and people actually believe in the “American Dream’ that success can be down to achievement alone. Older societies like Britain or Russia, who have the inequality of privilege much deeper ingrained, are less forgiving towards the greedy offers.


posted February 14th, 2007

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