Chimps=Economists?

Economists have long been bedeviled by the fact that people consistently refuse to behave as economic models predict. But now the Max Planck Institute of Evolutionary Anthropology in Leipzig, Germany, has moved on to more compliantly rational subjects: chimps.

They find that "unlike humans, chimpanzees conform to traditional economic models." When presented with a simplified version of the ultimatum game, in which one player decides how to divide a windfall between himself and another player, people frequently reject "unfair" offers (say, 8 for me, 2 for you). When an offer is rejected, both parties get nothing. Because if this human tendency, people tend to wind up with something close to a 50/50 split. But rejected small offers is not rational, and it infuriates economists when people consistently turn down small gains just to punish the other player for being unfair.

Unlike humans faced with these games, chimpanzee responders accepted any nonzero offer, whether it was unfair or not. The only offer that was reliably rejected was the 10/0 option (responder gets nothing). The researchers conclude that chimpanzees do not show a willingness to make fair offers and reject unfair ones. In this way, they behave like selfish economists rather than as social reciprocators.

In celebration of rationality, send a Monk-e-Mail to someone you love today.

Comments

[Dan T.]

When presented with a simplified version of the ultimatum game, in which one player decides how to divide a windfall between himself and another player, people frequently reject "unfair" offers (say, 8 for me, 2 for you). When an offer is rejected, both parties get nothing. Because if this human tendency, people tend to wind up with something close to a 50/50 split. But rejected small offers is not rational, and it infuriates economists when people consistently turn down small gains just to punish the other player for being unfair.

In our defense, it could just be that humans understand that it's more rational in the long run to demand fairness than to accept a small, unfair amount.

[Pro Libertate]

It's Monkey Tuesday!

[J sub D]

In celebration of rationality, send a Monk-e-Mail to someone you love today.

I despise linked web sites that I can't easily exit. That's all.

[stephen the goldberger]

Pride and ego is more important than your minor windfall. Include the costs of a bruised ego into your models and you will see rational behavior.

[RonnyBaby]

I think there may be a branch of Economists that assume that economic actors will not act rationally. Ludwig von Mises, Murray Rothbard, etc.

[Pro Libertate]

The role of schadenfreude in economics has long been overlooked. I see a PhD thesis and, perhaps, a Nobel Prize for the first economist to address this issue.

[Warren]

In this way, they behave like selfish economists rather than as social reciprocators.

I wonder if we can get one appointed Fed Chairman? I wonder if we already did?

[Mr. Jackson]

You know what that chimp reminds me of?

I remember back in the 1960s. Me and the boys used to chase any nigger drivin through our town. We didn't want to hang em without do warning so we'd ring bells and use a megaphone to let them know they weren't wanted. They got the message.

Today, it ain't so easy and many of the youngsters in the village don't look too kindly on that. Ah well, we still sometimes will ring a nigger's doorbell and just stare at'em or tell him about our proud confederate past.

[New World Dan]

Humans are more capable of long term strategy. Most of us are more used to being on the recieveing end of the ultimatum game than the offering end. As such, we want to condition the other side to making fair offers, especially since there is little to lose in rejecting "unfair" offers.

[Dan T.]

But if human tendency to reject unfair offers leads to more fair offers, isn't that more rational behavior?

KMW's article tells us that the chimps who make the choice often get very small amounts of money, while the human who makes the choice usually gets close to 50%. So who is more rational again?

[Episiarch]

Chimps=Economists?

Well, yeah. Duh.

[Episiarch]

KMW's article tells us that the chimps who make the choice often get very small amounts of money, while the human who makes the choice usually gets close to 50%. So who is more rational again?

Dan makes a good point here (gag, cough), except I don't think he RTFA because the chimps used raisins.

Whatever the motivation (punishment, offense, reputation, etc.), most times the offerer will give a "fair" offer because they are afraid an unfair one will be refused. So the responder gets a good deal. Therefore refusal of "unfair" offers creates motivation for "fair" offers by the offerer and produces, overall, better results for the responder than the "rational" chimp approach.

[Lord Greystoke]

Chimps are OK by me even if they don't understand "fairness".

Now those Hippie Dyke Bonobos ought to all be turned into bushmeat.

[anonymous coward]

Dan T.,

"The ultimatum game is an experimental economics game in which two parties interact anonymously and only once, so reciprocation is not an issue."

[J sub D]

Can we PLEASE get the 3:06pm poster removed? I'm asking nice, but I don't need pathetic loser rants polluting the often reasoonable, insightful, and humorous discussion I find here. PRETTY PLEASE! WITH A CHERRY ON TOP!

[Episiarch]

Can we PLEASE get the 3:06pm poster removed?

Isn't that just a joke? If not, ignore it.

[Russ R]

The perplexing irrationality of humans isn't their behaviour in repeated games (where the rational strategy is definitely to reject low-ball offers to benefit from higher offers over the long-term).

It's their behaviour in single (one-time) games, where they still reject small offers, even though there's no reason to punish an anonymous counterparty with whom they won't interact again.

The only reason to turn down the offer is so they can walk away confident that, even though they lost, they didn't let the other guy win.

"That's pride fucking with you. Fuck pride. Pride only hurts, it never helps."

[isildur]

"Why don't we put THEM in charge?!"

[Pro Libertate 2737]

isildur,

I know you're kidding and everything, but it turns out that your little joke is how the Planet of the Apes got started.

[stephen the goldberger]

The 3:06 poster is looking for attention, if you remove it or punish him it will only excite him. Let his words hang around like a stale fart.

I think this study shows more importantly that monkeys have no shame, so they can be used for whatever purpose we desire.

Isn't that really what bothers capitalist pigs, that human beings aren't tools of the establishment like the noble monkey? (Channelling Dan T)

[Lancelot Link]

DEMAND KURVE!!!

[prolefeed]

But if human tendency to reject unfair offers leads to more fair offers, isn't that more rational behavior?

KMW's article tells us that the chimps who make the choice often get very small amounts of money, while the human who makes the choice usually gets close to 50%. So who is more rational again?

Dan, congratulations on some twenty-percenters (I'm bumping you up from 10% based on your comments here).

In a one-time, no-repeat deal where your only objective is to get as much money as possible, the "chimp" response is the "correct" one. But, if the game is played for several rounds, then insisting on fairness becomes the optimal strategy.

I think that the human results in the one-shot deal can be explained by the small amounts of money involved. We value fairness and integrity -- it makes us feel good to think of ourselves that way -- and so in the experiment at hand, a couple of bucks is outweighed by other, nonmonetary considerations of more value. And, the person handing out the money knows we are likely to reject insultingly low offers, and thus rationally proposes something close to a 50/50 split. Play it with the chimp doing the dividing, and the human doing the accepting, and I think the humans would be more likely to accept low offers.

Raise the stakes so a million dollars is being divided, and I'll bet no one turns down an 80/20 or even a 95/5 split -- we value fleeting feelings of integrity and self-worth, but we don't price it at $200,000 or even $50,000. Quite a few liberals might turn down a 99/1 split, while I suspect conservatives and libertarians would grudgingly accept the $10,000.

[Umbriel]

But Russ R, it's harder for humans to disengage themselves from the long-term "justice" concept and adopt the one-time strategy because the longer term strategy is engrained. Pride is the motivator, but it has a long-term benefit.

Humans also have more long-term planning potential, courtesy of more developed abstract thinking ability. Chimps have to think smaller, trapped as they are in little social bands where they have no recourse but to cooperate with dominant troop members who may well have killed their children or otherwise abused them.

Y'know? It'd be interesting to do Ultimatum Game experiments with humans who have had to live under brutal despotic conditions most or all of their lives, vs. people who have had more personal experience of what's commonly considered "justice".

[Dan T.]

The perplexing irrationality of humans isn't their behaviour in repeated games (where the rational strategy is definitely to reject low-ball offers to benefit from higher offers over the long-term).

It's their behaviour in single (one-time) games, where they still reject small offers, even though there's no reason to punish an anonymous counterparty with whom they won't interact again.

The only reason to turn down the offer is so they can walk away confident that, even though they lost, they didn't let the other guy win.

Basically, the experiment shows that people consider fairness to be worth the cost of not accepting unfairness. You might even say that it shows people are willing to sacrifice as individuals to help the collective. Which might explain why we have civilization and chimps do not.

[Mr. Jackson]

You listen here, boy. Best to keep your mouth shut or I'll treat you like I did them other dark skinned folk in the 60s.

I'm a proud man standin up for my race and my land. I don't need self-hating whites like yourself tryin to push your way on to me.

[Dan T.]

Raise the stakes so a million dollars is being divided, and I'll bet no one turns down an 80/20 or even a 95/5 split -- we value fleeting feelings of integrity and self-worth, but we don't price it at $200,000 or even $50,000. Quite a few liberals might turn down a 99/1 split, while I suspect conservatives and libertarians would grudgingly accept the $10,000.

The beauty of it, though, is that only a crazy person is going to offer you anything close to a 99/1 split with $1 million being divided.

I'd bet that the more money at stake, the more likely the money is to be divided equally.

[a name before submitting the f]

In this way, they behave like selfish economists rather than as social reciprocators.

Of course, the souless beasts.

[Episiarch]

Basically, the experiment shows that people consider fairness to be worth the cost of not accepting unfairness. You might even say that it shows people are willing to sacrifice as individuals to help the collective. Which might explain why we have civilization and chimps do not.

Um, no. I thought I agreed with you, Dan (that their refusals were rational as it seemed to promote "fair" offers since offerers realized that refusals would happen), but you are now tying this into some grand altruism and collectivist scheme.

I totally disagree with that. What I think it is, fundamentally, is jealousy and envy, two particularly powerful human emotions. Many people, if offered a 90/10 split of a cool million, might turn down the 100 grand because it just pisses them off so much that the offerer is going to get 9 times as much for no rational reason. I can't tell you how many people I've known that hated anybody with more money then them, even if they were doing well themselves. Totally irrational and very powerful.

This foundation of envy refusal causes the offerer to realize that very "unfair" offers may be refused based on human nature and motivates them to make much more "fair" offers as this is the best strategy to get something rather than nothing.

[prolefeed]

Apply this logic to a presidential election. Assume that a curious series of plane crashes (being investigated by the FBI, natch) leaves you with a choice in the Republican primary of Ron Paul or Mitt Romney, with Hillary Clinton having the Democratic nomination locked up. Further assume you consider Hillary evil incarnate, and Mitt slightly less so. Should a libertarian then vote for Ron Paul, or for Mitt Romney as the electable lesser of two evils for the general election?

Explain.

[Blue]

I've always wondered about this game and how they controlled for it in humans. Most of these studies are done on college freshman - stupid young men and women who are deluded by their parents and educational institutions that the Universe is FAIR. It makes sense they will walk away from a couple of bucks out of spite and expect the same if they offered that. Now grad students are hungrier and they might not be so quick to turndown a few extra bucks and might assume the same from others. Maybe up the stakes to a $1000 pot and see if the behavior changes.

The chimps were working with sweet, succulent raisin. Maybe they were happy to get just one or two.

[Andrew G.]

Humans seem to have a built in sense of fairness or justice -- either learned at a very young age or part of human nature.

This is rational in a social context. By punishing those who act unfairly, you encourage society as a whole to be as fair and just as possible. That's why people will reject excessively unfair options on principle.

It's because we can envision future interactions that we are willing to demand fairness even in a one time interaction. It's better to get nothing now if it means that the people you deal with will learn a lesson and act fairly in the future.

This is also why some people feel outrage about financial inequality. It doesn't hurt them that CEOs get paid 100x more than a worker. At most they'd get a small pay increase if things were evened out. But it strikes at that sense of fairness.

[prolefeed]

Raise the stakes so a million dollars is being divided, and I'll bet no one turns down an 80/20 or even a 95/5 split -- we value fleeting feelings of integrity and self-worth, but we don't price it at $200,000 or even $50,000. Quite a few liberals might turn down a 99/1 split, while I suspect conservatives and libertarians would grudgingly accept the $10,000.

The beauty of it, though, is that only a crazy person is going to offer you anything close to a 99/1 split with $1 million being divided.

I'd bet that the more money at stake, the more likely the money is to be divided equally.

Good comment, Dan.

Assume the being doing the dividing is a chimp, or an autistic person who doesn't understand human motivations, and the split HAS ALREADY BEEN MADE. Do you take the $200,000? The $50,000? The $10,000? Would you take a split of 99.9 / 0.1, since that is still $1,000?

Re: your earlier comment, a few people value collective goods, but most simply have it hard-wired that it usually is in their selfish personal interest to insist on fairness -- and then cloak their choice in the mantle of altruism so they can attract chicks (or d00ds).

[Dan T.]

Um, no. I thought I agreed with you, Dan (that their refusals were rational as it seemed to promote "fair" offers since offerers realized that refusals would happen), but you are now tying this into some grand altruism and collectivist scheme.

I didn't say anything about a "scheme", but there must be something about humans that makes us work collectively together, even if it means sometimes making "irrational" decisions. For example, we generally agree not to steal things, even though theft is very rational as a one-time event from an individual point of view.

I totally disagree with that. What I think it is, fundamentally, is jealousy and envy, two particularly powerful human emotions. Many people, if offered a 90/10 split of a cool million, might turn down the 100 grand because it just pisses them off so much that the offerer is going to get 9 times as much for no rational reason. I can't tell you how many people I've known that hated anybody with more money then them, even if they were doing well themselves. Totally irrational and very powerful.

Call it envy if you like, but there must be a reason we've evolved such an emotion, which is really just a reaction to unfairness. The people who couldn't distinguish between a fair situation and an unfair one seem to have died off...

[isildur]

PL,

That comment was meant to be read in the voice of Hudson from Aliens. Note to self: don't use the less-than and greater-than symbols in HTML-parsed comments for added hilarity.

[Episiarch]

Call it envy if you like, but there must be a reason we've evolved such an emotion, which is really just a reaction to unfairness.

If we evolved this reaction, wouldn't it be likely that the chimps would show it as well? But they don't. It is most likely a cultural thing. If I don't get a substantial piece of the pie, nobody gets nothin'.

Remember, Dan, that this isn't about unfairness, it is about inequality of reward. It is neither fair or unfair for one person to get more of a windfall (i.e. unexpected, unearned money) than another. Refusal means nothing for anyone. Is that more "fair"?

For example, what if people who got 5 out of 6 lottery numbers could make it so that anyone who got 6 out of 6 didn't get the prize, because getting 5 out of 6 was so close that it "wasn't fair". What would you think of that? And how would you feel if you were somebody who rolled that one in a billion 6 out of 6 and then had it denied by a 5 out of 6?

[Pro Libertate]

isildur,

Ah, Aliens. One of the few worthy sequels in Hollywood history.

[joshua corning]

Chimps do not have markets and do not engage in trade.

Humans do....maybe markets and trade exist because we, unlike our chimp cousins, have a sense of fair play.

[joshua corning]

Give a chimp a nut and he will take it...give a man a nut he will look for a lower price from a competitor.

[MattXIV]

Actually, it is rational to refuse smaller offers as long as you can convince the other player you will do so before they make the offer. This is a relaxation of the formulation anonymous coward gives, but the only factor it relaxes is anonymity.

Being bound by one's nature to reject the low ball offers is an effective way of persuading others that you'll reject the offer and is more credible than a "rational" actor who will profess that they'll reject the offer but when the question is put to them will accept it. Thus, the irrational actor will get the better outcome - it becomes rational to make sure you'll be irrational during the game.

If you relax the rules futher to allow binding contracts, the optimal strategy would be to enter into a binding contract that you'll pay a 3rd party twice what you recieve if you accept less than some amount very close to all of the goods being divided and make sure the other player knows it. The person dividing the goods would give you the amount specified in the contract since they know they won't get anything otherwise since you'll reject to avoid paying the 3rd party.

In single round ultimatum game variations, the first party to lock their behavior in such a way as the other party knows it and is convinced gets to pick how the goods are divided. In the anonymous variation, if the offer-maker assumes that the other player is bound to reject an unfair offer, they're the first one to have locked in, so they've effectively dictated the sum; if the offer-maker does not believe the other person is locked in, they get to lock in first and make a slightly greater than zero offer. The communications barrier is what allows the non-pareto efficient outcome to occur by allowing the responder to think they've locked in when the offer-maker doesn't or creating confusion about the amount at which a player has locked in. With open communication, the refusal outcome can be avoided entirely.

[Dr. K.]

I fucking hate this as an example of "irrational" people.

People don't reject offers because they're irrational. They do so because they value the schadenfreude more than the money they've been offered. That is not per se irrational.

Why people value the schadenfreude at non-zero amounts delves into psychology and culture at least as much as economics. So when this game is used as such an example, it mostly reminds me how dismal the science behind economics can be.

[Pro Libertate]

Ah, Dr. K rises to the challenge. Your Nobel prize and 10 million kroner are on the way.

[Juwan]

sadly he has to split the prize 5/95

[LarryA]

Here I thought economics specifically and science in general were supposed to describe behavior, not label it as to whether it agrees with the theories.

If observed behavior doesn't correspond with the theory, then the theory needs revising.

[ChrisO]

"Fairness" is a social construct and varies tremendously across human history and cultures.

In this example, I believe that self-interest is the ultimate driver of both parties, with each calculating, in essence, what they can "get away with." Of course, it's also quite artificial.

[Dr. K.]

Thank you, Sir Liberate. I will gladly donate the money back if the Foundation if they can stop journalists from using this as an example of irrational economic behavior in people.

[Pro Libertate]

I think that all of human behavior can be traced to schadenfreude. The Germans are so wise.

[Juwan]

My biggest long term worry about libertarianism is that our brain is simply not built for it.

They should run this study on infants to see if this counterintuitive economics in ingrained in the human brain, or simply the result of cultures that emphasize fairness.

I know there are studies that showed babies are naturally altruistic. They need to see if babies have schadenfreude.

To me this does not suggest economics is a science of counterintuitive truths, but that economics may be a fundamentally flawed method to understand human behavior. Give me ammunition next time someone brings up Freakonomics or Tyler Cowen.

[Juwan]

Oh, and shouldn't this go into the category of "spite"?

"Schadenfreude" does not necessarily carry the connotation that one is losing something to hurt others, merely taking pleasure at other's misfortune.

[MattXIV]

To me this does not suggest economics is a science of counterintuitive truths, but that economics may be a fundamentally flawed method to understand human behavior. Give me ammunition next time someone brings up Freakonomics or Tyler Cowen.

"Rational" (the economic sense, which normally is concerned with outcomes of choices but doesn't care about process, is different from the popular sense which includes process) people are to economics as ideal gases are to thermodynamics. Despite being absent in reality, the mechanisms they describe are indeed present, they're used as the framework on which more complicated models are built, and depending on the situation, you can often get reasonably accurate results using them as models without modification, especially when you just need to determine the sign of a change and not the magnitude.

[joshua corning]

My biggest long term worry about libertarianism is that our brain is simply not built for it.

How is a sense of fairness, which is necessary for functioning markets by the way, anti-libertarian.

Lets take this example and put it in a real world scenario. Lets say a property owner offers a developer some land for a price. The property owner values his land at its potential value after it is developed. If he then takes the whole profit from the developer the developer will walk and no one gains. the property owner has to sell his property at a price that will leave a margin for that developer to make money or he will not sell his property.

Without a sense of fairness, empathizing with the other party, any transaction of this sort is an impossibility. Two monkeys will quickly either go broke or brake themselves leaving no resources to negotiated over.

[juwan]

MattXIV:

You're right, but a lot of people treat economics as faith (DEMAND KURV) and not the useful tool (with constraints) it actually is. Those that base economic theories on their deeply held views on how individuals behave ("communism fails because it goes against human nature"), they overstate their case.

It just reminds me how people were certain their instruments were faulty as they picked up data that reflected the discrete nature of mass rather than the continuous nature they expected. Maybe the micro-est of microeconomics (nanoeconomics?)needs to ceded over to neuroscience alone.

Joshua Corning:
I don't think our brains are incompatible with libertarianism considering current research, but just as there is some inconclusive research that shows our brains may be hard-wired for faith, I worry that some scientist will eventually prove that the reason that there were very few long-term successful societies that we can agree upon as libertarian is because there is something about how we are wired that is incompatible with libertarianism.

Its easy to ignore anthropologists, historians and economists, because you can challenge some assumption or some methodology as incomplete.

When you get to the harder sciences, its hard to contest the results. Neuroscientists seems to be blending increasingly with economics and I don't know how it will turn out.

I already sometimes feel like the bearded guy spouting Marx when I talk about libertarianism, I don't want to become the Churchy guy preaching creationism.

Luckily, we are nowhere near that state, and there are a lot of good reasons why it may never happen, but it does concern me a little bit in the back of my mind.

Way too long-winded, sorry about that.

[atrevete]

Empathy may be the key here. If someone offers a 95/5 split of $100, many people believe it says that the offerer thinks he's 20 times better than they are. We tend to take things personally. Most people don't want to accept crumbs because of their own self image. Chimps have no self image and so act more concretely and in the here and now.

[anomdebus]

A couple comments.
This is almost a tragedy of the commons sort of problem, since the "reward" did not belong to either parties at the beginning, so the first person didn't really earn anything.

I wouldn't necessarily call it irrational to reject something even in light of it being a one time thing. If the two parties come from similar cultures, the first one can imagine what they would do if offered a much smaller amount and decide that a more equitable cut would be more likely to be accepted.
I think there is an assumption that the amounts offered don't make a significant impact to the people's lifestyle. Otherwise, I would agree that a large amount would find more tolerance for an unequal split.
To put it another way, negligible amounts would probably need to be 50/50 for a human to agree to it. They don't gain much by taking a little, so it might as well be fair. On the other hand, if whatever the amount given is, for example, more than the person makes in a year (or more), it would be difficult to turn down even if percent was small.

[atrevete]

It's similar to leaving a waiter a 25 cent tip. It's going to make him mad, because he perceives it to be the insult that it is probably intended to be.

[thoreau]

anomdebus-

I think you're right. If I turn down $1 because I felt I should have gotten $5 (assume $10 is being divided) then I haven't lost much. My irrational decision was a cheap one.

OTOH, I'd have a hard time turning down $100 because somebody was dividing $1,000. In that case, irrationality would be expensive.

So maybe some economic principles do apply here: People will indulge in lots of irrationality if it's cheap (or if the costs are hidden), and they will engage in less irrationality when it's expensive. See, the demand curve still works!

[P Brooks]

I just thought of a really cool and insightful way to look at this. But I'm not going to waste it on you guys.

Neeener neeener.

[Edward]

I'll bet you'd be hard pressed to find a chimp who would send money to the Ron Paul campaign.

[BakedPenguin]

Edward, all the rich chimps are behind Giuliani. Everyone knows that.

Anyway -

OTTO: Look, we can split the money from the car 60/40.

BUD: Who gets the 60, kid?

OTTO: Well, I thought since I found the car...(sound of gun cocking)... that you do.

[robc]

If observed behavior doesn't correspond with the theory, then the theory needs revising.

Huh. Ive always gone with "Theory is always right. Sometimes reality is wrong."

[whit]

most modern (and wrong) economic theory is based on the concept of the "economic man" that acts rationally.

any trader (that's how i make my $$$) knows that economic man doesn't exist (well, maybe warren buffet, but other than that).

man is irrational, emotional, herdlike, and does not act in ways that would be optimal in game theory. not even CLOSE. Dr. brett steenbarger has done a lot of work in studying how people actually act in economic situations (while mostly concentrating on trading, the ideas are valid in general in terms of economic actions)

that's why "efficient market theory" and other such hogwash was (or is ) SO sexy to academics, and so ridiculously absurdly provably ridiculous in the real world.

[joshua corning]

Yup I think you are all missing the point here.

There is no market for getting free stuff with one person choosing how to split the free stuff and the other party choosing to veto that split or not.

What we have is a an owner and a purchaser. The owner is the one with the choice of the split and purchaser is the veto.

It seems fairly obvious to me is that Chimp is a terrible shopper who will take what ever deal he can get at the same time a terrible salesmen who will over price all his goods and destroy his consumer market.

A human is both able to price to sell and be a discriminating shopper both abilities are essential for a functioning market. One should note that Chimps do not have markets and we humans have a multi-trillion dollar global economy that has raised our life spans and reduced our child mortality.

To claim that humans are irrational for behaving in a manner that allows markets to exist at all is a miss representation of ration and the bases of markets.

[bill]

Can a wild chimp (one not taught by humans) even count to 2? Also what is used as the currency for chimps? Food? Well I think it's pretty obvious if you put any amount of food in front of an animal they will accept it. The thing I find most interesting about the ultimate game is that the giver wouldn't automatically offer a 50/50 split knowing that that offer will most likely to be accepted therefore gaining some money for themselves.