In a classic experiment known as the Ultimatum Game, person A is given 10 coins to split between himself and person B. If person B accepts the distribution, they both keep the coins; if not, no one gets paid.
According to Game Theory, the optimal solution is for person A to give himself nine coins and person B one coin--both will end the game richer than when they started. However, played in the wild, the most common distribution is 6-to-4, a ratio seen as fair by both parties.
But why? What's the origin of the human idea of fairness?
To answer that, let's take a look at a spin on the Ultimatum Game called the Dictator Game. In Dictator, player A decides how to split the 10 coins and they're split accordingly. Just like that. Player B has no say. In this game, person A is much more likely to split the coins 9-to-1.
The difference between Ultimatum and Dictator is, of course, person B's ability to punish person A. Let's take a closer look:
In Ultimatum, person B scoffs at a one-coin offer, sacrificing personal gain in order to punish person A's greed. Game theorists call this move an altruistic punishment. While person B loses a coin in this maneuver, he can expect his corrective behavior to result in more coins for him and all the other B's of the world down the line.
