Post No.: 0389
People can behave quite irrationally, particularly when money is involved! Since money was invented rather than is something that’s innately natural – hence the human species didn’t exactly evolve with it in their environment until relatively recently – this should arguably be no surprise. (Having said that – even some long-evolved instincts can be irrational e.g. generalised fears and superstitions, hence being irrational is perhaps just what humans are like?!) For instance, losses tend to be overvalued (this was covered in Post No.: 0345); and many people would rather have nothing than something if someone else will get more…
Take the ‘Ultimatum Game’ – a game with two players and a stash of something both of them want, such as $10 in $1 notes. One player offers a split of it to the other player, such as a 70:30 split, and this other player must either take this offer or leave it, where if she/he leaves it then neither player gets anything. This is a one-shot game and no negotiations are allowed. It is played anonymously and the players and their roles are picked randomly.
Depending on the culture, the expectation of fairness and what constitutes as ‘fair’ varies; but in much of the ‘developed’ world, most people wouldn’t accept an offer of 20-25% or less of the total pot, even though it’d rationally be better than receiving 0%.
Perhaps this behaviour isn’t irrational though and is highly evolved or at least culturally sophisticated? The reason could be because punishing and teaching a greedy party a lesson in fairness, even if this comes at a small personal cost, is beneficial to society overall in the bigger picture? Greedy people should learn to not be so greedy again. It’s an altruistic punishment. What’s short-term or individualistically irrational can be long-term or collectively rational, and vice-versa. This is also evident in the context of looking after environmental resources – what’s rational for the sake of maximising the short-term quarterly profits of a company can be irrational for the very long-term economy and environment. However, this game doesn’t seem to reflect real-life behaviours, at least in this context, for consumers don’t tend to punish corporations that are too greedy – consumers will still accept the new, expensive, barely-better-than-the-last-version products they sell as if the minor upgrade is better than nothing, all while environmental resources dwindle and the waste builds up.
In general, greed and/or selfishness can pay off in the short-term individualistically but can cause great harm in the long-term and/or bigger picture collectively. We mainly seem to fail to punish unfair offers when our ability to think of the consequences is inhibited. Meow.
Some players will consequently anticipate this sense of fairness and end up offering 50% of the pot when they don’t need to go that far either. Empathy might make one understand that the other party won’t accept an offer much less than 50%. In other words, understanding that people are usually irrational and won’t believe that ‘anything is better than nothing’ will compel one to give a fair offer.
In some cases, behaving, or at least being seen to behave, irrationally can therefore be sensible. For example, if you know that someone will always give a measured and proportionate response to a transgression, you might be able to exploit them. You could steal $1 from them, knowing that they’re not going to find it worthwhile to retaliate that hard over getting that small amount back. But if they insinuated that they’d kill you if you tried then you’ll probably not try to steal from them at all! Of course, in the first scenario, they’ll likely learn from that transgression and be more cautious around you in the future, and tell others about your reputation for stealing, even if they didn’t directly retaliate against you that time. But if they simply expressed that they’d kill you over $1 then you might not even entertain the idea of exploiting them even once. The threat doesn’t have to go as far as murder but it has to be irrationally disproportionate and make anyone who’s thinking about exploiting them worry.
There’s also the ‘Dictator Game’ – where one player gets given an amount of money, such as $10 in $1 notes again, and can decide to give any proportion of it, from zero to the full amount, to another player, and that’s the end of the game. This game (if we can call it that!) is again one-shot, played anonymously and the players and their roles are picked randomly.
Here, people will still strangely give ~20-30% of the money away on average. People tend to give more than the minimum amount of money away (even sometimes 50%) in this standard version of the dictator game because of empathy, guilt and the perception of fairness. But this can be considered an irrational behaviour, especially because it’s a one-shot game i.e. there’s no chance for retaliation from the other side.
Some will hence conclude that this is the clearest example of people’s natural and innate tendency for altruism, or in some cases even egalitarianism when 50% is given away. However, others will argue that the dictator game is not representative of any real-life scenarios. For example, the money hasn’t been earned by either party (although inheritances, grants and gifts in real-life aren’t earned either yet people aren’t typically sharing these with others as soon as they get them) and there’s no sense that the other party needs the money (so possibly even more could’ve been shared? After all, we donate to people in need, not randomly). It’s also one-shot, framed as a game (which suggests a competitive rather than collaborative context) and it might also be different with a life-changing or sizeable pot of money. There may also be a cultural bias because these experiments are mainly conducted in ‘western, educated, industrialised, rich and democratic’ (WEIRD) countries, where bumping into and interacting with strangers is a common and sometimes daily occurrence; and the findings from some countries that are far from ‘WEIRD’ show less kindness to strangers (at the extreme – small, isolated tribes are often incredibly lethally violent towards any unknown strangers encroaching onto their territories!)
And even though it’s played anonymously, people may still believe that they’re being monitored and judged in the lab situations (i.e. assuming that there are hidden cameras or two-way mirrors somewhere) hence they’re probably trying to protect their reputations. To arguably prove this conclusion, most people would rather take $9 and that’s it, than take $10 to play the dictator game, because the first option removes the responsibility of deciding on how much to give. (It’s like when most people would rather walk on the side of the road away from a beggar than walk directly past them to either give or not give them anything. Intentionally walking on the other side of the road is essentially making a decision of avoiding giving a donation but one believes that one won’t be judged by onlookers as taking such a decision.)
A clever modification of the dictator game has the dictator player have $10 to share, knowing that the other player has $5. Here, most people will end up giving a little of that $10 to this other player (~$2 on average). Nothing out of the ordinary with the results of the standard game here yet. But if the dictator player also has the option to take up to $5 away from the other player, most people will end up taking a dollar or two from this other player! This suggests that it’s not altruism at play in these particular scenarios but reputation management that’s the driving force for these decisions – when the parameters of the options are modified so that being a total **** would be to take all $5 from the other player, rather than ‘merely’ give $0 to the other player, people feel reputationally safer to take ‘just’ one or two dollars away from them. So people really want to appear fair rather than really be fair in front of real or imagined observers! This also shows us how we judge moral decisions in relative rather than absolute terms – morality is malleable depending on what options we’re presented.
Babies prefer familiar faces and are naturally more tentative amongst unfamiliar faces (hence the benefit of raising children amongst diversity, including males sharing the child minding), and children old enough to play the dictator game are typically quite selfish – most parents are familiar with the struggle to get young siblings to share! Young children might even spite themselves in order to try to get relatively more than another child. However, what’s innate from birth or when young isn’t necessarily evidence of innateness for all ages though (e.g. just because babies and young children feel no sexual urges before puberty, this doesn’t mean sexual urges can only be explained via cultural learning as one grows up(!)) ‘Theory of mind’ only firmly develops by the age of ~4-5 years old and this ability is crucial for empathy and thus is highly relevant here. And in itself, people arguably aren’t necessarily ‘good’ or ‘bad’ for merely following the incentives.
Other experiments and examples of real-world behaviour demonstrate true altruism (e.g. heroism) but not the dictator game. The dictator game nonetheless teaches us that cooperation and kindness can be shaped by environmental factors. This includes the surrounding culture, promoting empathy such as by humanising other parties rather than dehumanising them behind avatars, usernames or anonymity, and learning or being enlightened to the understanding that, in the long-run and with repeated interactions with the same people/groups of people, one serves one’s own self-interest best by also helping others (e.g. the environments and economies of different countries embracing their interdependence with each other). We need the rational reasoning to understand that others, wherever they are in the world, are people too, and we could also make use of the feeling that we’re being under surveillance or otherwise having our reputations judged to improve cooperative behaviours. (There are other, good, reasons to protect our privacy but one, less good, reason why people don’t want to be watched all of the time is because it reduces the opportunities to cheat, steal, deceive, play unfairly or the like without a risk to their public reputations!)
Real life is full of multiple-shot rather than one-shot interactions. And whenever there is a potential for retaliation or things coming back to us directly or indirectly one day, it could be viewed as a good long-term, big-picture rational behaviour to share and be fair because to give a portion of one’s time or money away to a stranger we’d likely never directly meet is to contribute to a kinder society overall; and because most people reciprocate ‘tit-for-tat’ or follow social norms, a kinder society will come back around to us some day. Or consider the alternative of everybody just being short-term, small-picture rationally selfish all of the time – it’s a less friendly place to be for everyone, including for oneself as an individual. Giving also creates good feelings within the giver, possibly due to the association of ‘giving’ with ‘feeling good’ – when we feel good, we’re kinder, thus if we’re being kinder, it’s assumed that we must be feeling good. When we make someone feel happy, we then empathise with their happiness too. We feel more connected to others when we give to others, and this feeling of greater connectedness makes us feel good. Or, for most people, kindness simply intrinsically feels good.