Testosterone economics

Remember the ultimatum game?

In this game, one player divides a pot of money between himself and another.  The other then chooses whether to accept the offer.  If he rejects it, neither player benefits.  And despite the instincts of classical economics, a stingy offer (one that is less than about a quarter of the total) is, indeed, usually rejected.

Here is the latest result:

…the responders who rejected a low final offer had an average testosterone level more than 50% higher than the average of those who accepted.  Five of the seven men with the highest testosterone levels in the study rejected a $5 ultimate offer but only one of the 19 others made the same decision.

In other words, irrationality isn’t just a deviation due to imperfection, we are programmed to be spiteful.  Here is information on how high testosterone levels are correlated with urges to compete and be dominant.  Here are some other correlations; should we make a few leaps and infer that women in "sheer" clothing are more likely to be spiteful?  Should you prefer to undertake joint projects with men of slight build and women in flat shoes?  Should you deliberately seek out non-hot mates, in the realization that long-run cooperativeness is of more value than short-run hotness?

The pointer is from Daniel Akst.

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