Stuff You Should Know - What's the ultimatum game?

Episode Date: September 16, 2008

The ultimatum game is an economics experiment that provides insight into the human psyche. Check out our HowStuffWorks podcast to learn about the rules to the ultimatum game. Learn more about your ad-choices at https://www.iheartpodcastnetwork.comSee omnystudio.com/listener for privacy information.

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agency would turn out to be a front for a drug pilot who would claim he did it all for this CIA. I'm Lauren Brad Pacheco. Join me for murder in Miami. Talk about walking into the devil's den. Listen to Murder in Miami on the iHeart Radio App, Apple Podcasts, or wherever you get your podcasts. Hey, and welcome to the podcast. Josh Clark, Chuck Bryant here. How's it going, Chuck? It's going great, Josh. You? I'm doing pretty good. I'm doing pretty good. I've often wanted, Chuck, if you won the lottery. Who would you share any of your proceeds with? Obviously, your wife, Emily, would reap the benefits of this. Is there anybody else like your parents? Would you buy them a boat? Who would you share it with and in what amount? Have you ever thought about

that? Yeah. Yeah. I think everyone kind of thinks about this. I don't play the lottery, first of all, because I think it's a suckers game. True. But if I found a lottery ticket and won a lot of money, I'd be pretty generous. I think I'm pretty generous. Okay. I've always liked to think the same thing to the point where I kind of have allotments of who would get what based on how much I won. The thing is, it's all kind of esoteric at this point. Everyone's generous in theory. Yeah. I wonder how much that would change with cash in hand. Right. And I was actually reading an article about a guy who's in Melbourne who this actually happened to. One of his friends offhandedly suggested he buy a lottery ticket and the guy went in, bought it, and actually won

$13 million. He's got the money in hand and he's still sharing it with his buddy who just suggested he buy a ticket. Yeah. That's nice. So it is nice, but at the same time, this guy's actions fly in the face of all theories and all sorts of different disciplines. Evolution, economics, game theory. Right. Have you heard of this guy named Ariel Rubenstein? I have. I like old Ariel. Do you? Yeah. He's got an interesting theory. He's a pretty approachable guy from what I understand. He came up with this thing called the ultimatum game. Right. In the early 80s, I think. Yeah. Something like that. Let me just give a quick rundown of the ultimatum game. Okay. Basically, some guy comes up to you and I, Chuck, and hands you $21 bills. I think you know where I'd be

headed. Yeah. I'd say, Chuck, come back. That guy would be like, what's your friend's name? I'd be all like, I don't know. I don't know him. I just met him at number 16, Bush Helter. Somebody would get those $1 bills. Right. So let's say you did stick around. Your curiosity was piqued because some stranger came up and gave you $21 bills. And he had some instructions that went along with it, namely that you had to split it with me in any way you saw fit. Right. I had the ability to reject any offer you gave me, but if I reject your offer, then neither one of us gets squat. He takes the $20 back, right? Right. So I could give you a dollar, keep 19. You could say, no, thanks, jerk. Right. And the guy takes his money back. Right. But the

thing is under this thing called rational maximization, which is an economic theory that basically all people are out for the most for themselves. Right. You shouldn't even be concerned with the idea that I would reject your offer. Right. Number one, you should give me $1 because that's the least amount you have. Right. And secondly, I should take it. It's found money and that should be that. You've got 19. I've got a dollar. I may be mad at you, but still, I didn't do anything for the buck. Right. So that makes perfect sense in theory. And Ariel Rubenstein is very, very well-respected game theorist, except for this one just magnificent, just terrible prediction. Right. This is a blot on his record. Right. So these

German economists put it to the test, put the ultimatum game to the test in real life. And they found that what they found was that there is no support for Rubenstein's hypothesis whatsoever. Right. People, I think they found, gave an average of 37% of the money away. And then what I thought was really interesting was that half of the people who received 30% or less would not accept it. They rejected the offer, even though it was found money. And in other cases, there were more generous offers than they needed to be. Right. So if they got, let's say it was 20 Deutschmarks, I guess now the Euro, but back then it was Deutschmarks. Sure. They would give them three and they just threw it right back in his face. Exactly. That doesn't make any sense again.

Right. So it was enough to get the curiosity of economists and mathematicians and all sorts of other people peaked. Right. Right. And so they started looking into this and they're like, well, game theory, it makes sense, but there's a flaw here or there. Let's tweak it a little bit. Right. They tried variations. Right. And one of the ones that they came up with was the dictator game. Right. I like this one. Yeah. This one makes a little more sense to me. And yet, it still just, it doesn't make any sense. Basically, under the dictator game, it's the same thing as the ultimatum game, except they give me 20 bucks to share with you. I can either take $2 and give it to you and keep 18 for myself, or I can half the $20 with you

and split it equally. Either way, you have to accept the offer and I get to keep the money no matter what. Right. So there's no loss for me. And yet, they found that like 76% of the people who played the dictator game split the 20 bucks in half, even though they knew that if, if they gave the other person $2 that they could, they got, they kept 18. Right. And as far as I know, these people were actually keeping the money to make this a very real thing. Right. To really gauge people's reactions. And, and the vast majority of the people were splitting things evenly. This is mind boggling. Don't you agree? It is, but you know, it was Germany and it's called the dictator game. So they're, they may be a little bit afraid almost to come. Right.

Exactly. With their rib turtle neck sweaters and all that. Right. Yeah. So this further peaks people's curiosity. Like Rubenstein inadvertently just set off this huge chain reaction that people's entire careers have been built on his one prediction of the ultimatum game. Right. Right. So they start, they start looking into theories about sharing and altruism. And we actually did a podcast, how altruism works based on an article called the, is there such a thing as a truly unselfish act? Right. And altruism shouldn't exist. You know, right. Rational maximization should because it falls in line with evolutionary theory. But I mean, so what is that the human spirit or is that something we've developed? No one has any idea. And, and they've, we don't

even know if it's human actually. They've done some studies. They did one on chimps and they show zero. They don't show any sense of fairness. They don't mind if they're, if they're getting screwed out of something, as long as they get something, they don't care in what amount or how much someone else is getting. Right. But other monkeys have shown a sense of fairness, specifically the Capuchin monkey. Yeah, this is a cool study. Did you ever see Monkey Shines? No, I don't. Monkey. You didn't see Monkey Shines? No way. Okay. Well, wow, it was pretty good. Actually, it's a, it's a horror movie about a out of control helper monkey who just goes on the ramp. Oh, I remember. It's like silent night, deadly night, except with a monkey. That's exactly why I didn't

see it. No, thank you. It was okay. Um, well, basically, this is the same kind of monkey and they're very smart and they're often used for helper monkeys. And these researchers just down the road apiece at Emory University, right, ran this experiment on them. And so they would put some monkeys together and they'd have them get the retrieve a pebble. And in return for bringing the researcher a pebble, the both monkeys would get cucumbers. Now, after a while, one monkey would would get a grape in return for retrieving a pebble while the other still got cucumbers. Right. So one monkey's kind of like, you know, what's going on. And then after a while, while one monkey still had to retrieve a pebble to even get a cucumber, the other monkey was getting grapes

for doing nothing. Right. And this led to monkeys getting upset. Yeah. Throwing food, refusing to play. Right. And really, I mean, like a cappuccino monkeys, if you've never seen one, you really have to go on to what's the ultimatum game on how stuff works. They're the cutest things on the planet. I can't imagine seeing one of these just acting out hurt. Yeah. It's kind of a mean experiment. It happened just down the road. But apparently it let us know that humans aren't the only ones with this higher mind sense of fairness kind of thing. Ultimately, though, we still have no idea what's going on. Right. I did think it was interesting that people that participated in the game, they found that they looked for nonverbal cues from their partner in the game. Right.

To try and pick up what they think they should give. Right. And it kind of made me think, you know, any study where you know you're being studied, I kind of have not problems with, but you wonder, you know, if I knew that someone was giving me this $20 bill, I would give away half of it just so wouldn't mean wouldn't seem like a schmuck. Right. Exactly. It's like Heisenberg's uncertainty principle. You know, just by observing something, you change its behavior. Exactly. And I wonder how much that factors into this too. And that that nonverbal cue study you were talking about, it seemed a little hinky to me. I wasn't sure how much faith I put in it. But I wonder how much of that lack of faith is derived from just the idea that that's just such a

depressing notion that we're really always in fact out for ourselves and trying to rationally maximize. And we're actually doing it through nonverbal cues, sizing up how generous we think the other person will be for a big payoff later on. Right. Like you and I are walking down the street and I see a 20 on the ground. I looked at, I pick it up and then I look to see if you saw me pick it up. Pretty much. And maybe if I noticed you saw me, I'll share it with you. If you didn't notice, then what 20? Right. And even if even if you just kind of go across the board and help everybody equally, just as a general rule, right, how much of that is based on a belief in karma, you know, karmic debt, karmic payback, that kind of thing that you think that you're going to

ultimately receive a reward. And that's why you do it, which leads us back to, you know, that altruism. Definitely, which apparently doesn't exist. And I don't know. I figure five, 10 years down the road, we'll have the specific, you know, genetic code for altruism or faking of altruism down. Well, I do know if someone came and gave us $21 bills and we'd probably head down to the dance club and everything would be fine. We probably, we wouldn't split it evenly. We'd just go ahead and throw it on stage at the same time. Exactly. Okay. That's altruistic. Yeah, exactly. This is a pretty dense topic. It's a really interesting article. I suggest you guys go read it. What's the ultimatum game on howstuffworks.com and stick around to find out which article has

chucked very nervous for next week. The war on drugs impacts everyone, whether or not you take drugs. America's public enemy number one is drug abuse. This podcast is going to show you the truth behind the war on drugs. They told me that I would be charged for conspiracy to distribute 2,200 pounds of marijuana. Yeah, and they can do that without any drugs on the table. Without any drugs. Of course, yes, they can do that. And I'm the prime example of a tax. The war on drugs is the excuse our government uses to get away with absolutely insane stuff. Stuff that'll piss you off. The property is guilty. Exactly. And it starts as guilty. It starts as guilty. The cops, are they just like looting? Are they just like pillaging? They just have way better names for

what they call like what we would call a jack move or being robbed. They call civil asset for it. Be sure to listen to the war on drugs on the iHeart radio app, Apple podcast or wherever you get your podcast. There is no need for the outside world because we are removed from it and apart from it and in our own universe. On the new podcast, The Turning, Room of Mirrors, we look beneath the delicate veneer of American ballet and the culture formed by its most influential figure, George Balanchine. There are not very many of us that actually grew up with Balanchine. It was like I grew up with Mozart. He could do no wrong. Like he was a god. But what was the cost for the dancers who brought these ballets to life where the lines between the professional and the personal were hazy and often

crossed? He used to say, what are you looking at, dear? You can't see you, only I can see you. Most people in the ballet world are more interested in their experience of watching it than in a dancer's experience of executing it. Listen to The Turning, Room of Mirrors on the iHeart radio app, Apple podcasts or wherever you get your podcasts. So, Chuck, what article has you very nervous? Well, Josh, next week I'm going to visit the in-laws in Akron, Ohio and we have plans to go to Cedar Point, which is the greatest amusement park on the planet. That's what I've heard. My wife has been touting it as such for years. You got to go on the Millennium Coaster. It is the scariest experience you will ever go through.

You're basically falling forward as you go down this, I think, 90 degree or maybe more than 90 degree hill. It's mind-bendingly scary. I can't wait. And I love roller coasters, but it does have me a little worried in the article that we have on our website. What if I were on a roller coaster and the safety harness broke by our veteran writer, Catherine Nier? Yeah, I don't know that you should read that before you go. You might want to save that one for after. That's a good idea. Yeah, so you can find out what would happen if the safety harness broke while you're on a roller coaster on HowStuffWorks.com. But again, like Chuck, I advise you to read it after you get back from the amusement park. For more on this and thousands of other topics,

visit HowStuffWorks.com. Let us know what you think. Send an email to podcast at HowStuffWorks.com. Alabama Industrial School for Negro Children and how those five girls changed everything. Listen to Unreformed on the iHeart Radio app, Apple podcasts, or wherever you get your podcasts. I'm Lauren Bright Pacheco. Join me for murder in Miami. Talk about walking into the devil's den. Listen to Murder in Miami on the iHeart Radio app, Apple podcasts, or wherever you get your podcasts.