Monday, October 15, 2007

And the Ultimate Rational Actor Is...Curious George?

You've probably heard of the ultimatum game, an experimental economics game in which two parties interact anonymously and only once, so reciprocation is not an issue. The first player proposes how to divide a sum of money with the second party. If the second player rejects this division, neither gets anything. If the second accepts, the first gets his demand and the second gets the rest. In many human cultures the second player routinely rejects any division leaving him or her less than 20 percent of the pie, an outcome that suggests a human sensitivity to fairness and which has spurred some debate over how to square that behavior with the self-interested rational actor model underlying most of neoclassical economic theory, including law and economics. Observed departures from rational actor behavior have given rise to the disciplines of behavioral economics and complexity economics.

A curious development in this field comes from research in which chimpanzees played the ultimatum game. See Keith Jensen et al, Chimpanzees Are Rational Maximizers in an Ultimatum Game, 318 Science 107 (Oct. 5, 2007). Our near relatives, it turns out, are impeccably rational, accepting virtually any offer above zero (chimps are chumps only to a point) and routinely making decidedly unfair offers (including zero). The researchers concluded that "one of humans' closest living relatives behaves according to traditional economic models of self-interest, unlike humans, and that this species does not share the human sensitivity to fairness." Traditional economics, it seems, would work swell in a society of chimps, who are perfectly rational in acting like chumps.

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