Saturday, June 07, 2008

The beat goes on...

TPS commenter extraordinaire Bryce Ryan sends along this bit, another stop on the never-ending road to unraveling the ultimatum game.

The last few lines were interesting, commenting on the paper's ability to discern rationality from urge impulses. The ultimatum game, of course, is itself an exercise in irrationality by strict economic definitions. The largest lesson you can take from the exercise, in my opinion, is the people's personal welfare functions have social equity versus personal efficiency tradeoffs. I always find this interesting-- you can't have personal equity issues, of course, but you're willing to make yourself worse off at the cost of witnessing no bad acts. This isn't quite the same as the typical public economics social welfare function equity/efficiency tradeoff.

Ultimatum games typically play to about 40% efficiency; with the stats presented in the article, it sounds like they were about in this range.

I can't speak to the science of what's going on here, but neuroeconomics is a fast growing field...

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