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Roy F. Baumeister is Eppes Eminent Scholar, Professor of Psychology, and head of the social psychology graduate program at Florida State University. See full bio

Comments on "The Evolution of Economic Rationality: Do Monkeys Understand Money?"

The Evolution of Economic Rationality: Do Monkeys Understand Money?

To gain perspective on human financial decisions, one may ask, what would monkeys do? Read More

"Economists continue to

"Economists continue to scratch their heads at the results of studies with the Ultimatum game. They assume that people are basically oriented to maximize their own profits. If you and someone else worked equally to earn $100, and that person has the power to divide it and chooses to offer you only one dollar while keeping $99 for himself, well, you are still better off with one dollar than with nothing. Hence economic rationalists find it slightly scandalous that people ever refuse any offer. Economists think that if people were true to financial logic, they would act more like monkeys."

The true assumption made by economists is that people are oriented to maximize their own *utility*; this isn't necessarily the same thing as 'money' or 'financial profit'. If people care about 'money' *and* 'fairness', then refusing an offer is both 'rational' and explainable. Your point about the difference in preference for fairness across monkeys and humans is well-made, but I don't think the people who study the ultimatum game find it 'scandalous' to see refusals; instead that is precisely what motivates them to study this preference for fairness.

"The true assumption made by

"The true assumption made by economists" is actually a truism. Of course people try to maximise what benefits them the most, if you define what benefits them so broadly it becomes intangible. This doesn't provide much insight.

The true assumption...

I agree with Matt. That people maximize utility is indeed a non-falsifyable hypothesis. Whenever there is a refutation of the predictions, the economists (we, I at least), say "well, that's because their preferences look like that". No insight, indeed. But it is still a beautiful theory...

fair exchange

Nobody has a sense of justice, but everybody has a sense of injustice.

I don't think these

I don't think these experiments give any insight into money at all - I think money is simply a logical outcome of having a fairly large society composed of multiple individuals with their own interests and different skills/resources. (The step before this is barter, but this becomes less practical as the society becomes more complex.) I think intelligent alien creatures with a totally different psychology but facing the same conditions would adopt a money system too, it's not a product of our particular psychology, but a logical solution to the problem.

experimental design limitations

The results of the Ultimatum Game and any conclusions drawn from it are limited by the experimental design of the study. The amount of money changing hands effects the results. Many people can afford to act on principles of fairness and justice when the cost of doing so is low. If Bill Gates proposed 5% of one billion dollars I wonder how many responders would reject the offer? I think the gap between humans and monkeys would contract toward zero.

If I was offered 5% of Bill

If I was offered 5% of Bill Gates' worth, for nothing; and if I didn't take it, he'd lose all his money too (as per the experiment). Then that would be a no-brainer.

But the situation that the experiment purports to recreate is one where the responder has exerted equal effort to the proposer. 50% would be their moral right, and anything less is a (perhaps necessary) compromise to the inherent unfairness of the system. If I was equal partners with Bill Gates, and I was offered less than a 20% share, then I'd be pretty indignant too; and if rejecting the offer meant that he'd lose out too, then so be it.

Though you're right: it's diffucult to gauge, since earning a share of the $10 requires no more effort than turning up to the experiment. And for the sake of controllability, no such imaginary scenarios can be put to the subjects (should they really need to be told that they are equals?). just goes to show how diffucult it can be to reduce human behaviour to controllable experiments.

History of money

The history of money shows that it is far more ancient than the article suggests. The earliest known middens, thought to be at least 40-thousand years old, contain perforated shells that were apparently used in trade. See A History of Money by Glyn Davies.

factual correction

Chen and Hauser were at Harvard, not Yale, when they completed this work.

Ultimatum Game Theory

The design of the experiment may be fundamentally flawed.

For one thing, outside the lab, humans interact with the same set of people over and over again, so being altruistic (offering 50%) has an assumed future reward.

Also, ten bucks ain't much money. For a lot of people, not worth the time required for the game.

Maybe better to posit this in an un-gamelike way:
"If you were starving, would you accept a single slice of bread from someone who held a loaf, or would you refuse, denying bread to both of you?"

Suddenly, you start thinking like a hungry monkey.

What SORT of monkeys are we

What SORT of monkeys are we talking about? This matters. The "monkey" in the picture, for instance, isn't a monkey at all, but an ape. Are the monkeys in the article also apes? Because if they are, how can the authors expect me to take any of these finds seriously if they can't even get the species correct?

A Gaping Flaw

The ultimatum experiment is inherently flawed for both man and monkey. A human would refuse an unfair offer based on many conditions, but a primary one (and ignored by the researchers) is whether or not the subject can AFFORD to refuse an unfair offer. If the offerer is being unfair and offering substantially less than equity, the offeree can refuse if they have enough resources to justify the refusal. These resources can include their own savings and assets as well as legal resources such as litigation... why accept an unfair offer when you can turn around and get that fair share later (and then some)?

Compare and contrast with a zero sum game where the offeree has no resources... I would bet that the offeree would choose unfair offers, even 1 dollar out of a hundred if they had no recourse or holdings of their own.

The monkeys are, in essence, operating under these zero sum rules. As far as the monkey is concerned, this is the only instance under which the ultimatum can operate... the whole catalog of legal and economic precepts (the culture of MONEY) is not embedded in their cognitive map.

Has this same ultimatum experiment been performed on cultures without the western economic and legal legacy? What were those results, and could those results be changed if the subjects were given a thorough indoctrination into supply and demand?

Finally, since the ultimatum experiment does not exist in western culture, why use such an experiment to gauge economics?

"Compare and contrast with a

"Compare and contrast with a zero sum game where the offeree has no resources... I would bet that the offeree would choose unfair offers, even 1 dollar out of a hundred if they had no recourse or holdings of their own."

Quite true, and these are the conditions in which many people are forced to make these kind of choices (e.g. when impoverished and seeking employment in times of high unemployment). This weakens one of the central myths used to justify free market capitalism - that all contracts are free and fair.

"..is whether or not the

"..is whether or not the subject can AFFORD to refuse an unfair offer.."

Indeed, in this experiment both players are presupposed to be in a similar economic condition while the outcome has no influence on their future -- a condition which poorly describes the outcome of real life transactions.

A man in this controlled experiment might perceive himself as a player in a game. He is challenged to win the largest sum possible in relation to the other player. He will try to win the opponent, not collect any amount possible - i.e. simulating game tactics. And not to forget the notion - that is a culture trait - that in an environment where tough competition takes place it is primary that the opponent does not gain the lead - regardless of the self-misery.

Surely, the results cannot be upgraded to account for human nature but merely for the actions taken by specific people from a specific cultural background and within a specific nation-wide economic environment.

The first thing I noticed

The first thing I noticed was that the picture accompanying the article showed an ape, and that the article went on about "monkeys". Also, the type of experiment (extremely flawed as described) would never have been done with monkeys in the first place.

Any wonder, with reporting like this, that the general public is so ignorant of true science?

stingy monkey

"Two specific monkeys were conditioned ... and the other never pulled the lever for his partner (stingy) ... Monkeys that played with the stingy monkey also figured it out quickly and subsequently shunned or were aggressive toward him. "

and thus was created a socially maladapted monkey, scarred for life. This is certainly cruel, if not unusual.

hmmm...

monkeys know life is unfair.

and still

monkeys know life is unfair
and still
they play the game

Man does not have an ape ancestry

People have always been people. 'Lucy' and Homo erectus have been shown to be extinct side branches in the alleged "human evolution" chain. Once again man stands in splendid isolation. It was an evolutionist who said, "The origin of animals is almost as much a mystery as the origin of life itself" - Donoghue, Nature, Jan., '07 p. 155.

Reputation

People may want to reject or accept offers to maintain a reputation. If I accept an offer in which I get only 1 out of 100 dollars, the next person I deal with could know that I will accept being screwed, and he will screw me too. So our "sense of justice" may be perfectly rational in the long run, even if it is not rational in a one-time snapshot experiment.

The comment "A Gaping Flaw" by Eric makes an excellent point. Just look at labor relations in different societies to see his point played out in the real world.

Dear Sir, I would like to

Dear Sir,
I would like to reiterate my request if I can be permitted to use the photo of the monkey with money for my online article.
Thanks

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