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.


I know others have made this point ad infinitum, but the ultimatum game was more likely showing people
playing the strategy of not wanting to look weak. "If word got out that the second parties are pushovers..."

The experimenters of course, "assured" the subjects that the tests are, like, totally
independent. But the subjects likely have a broader definition of "repeated game".

Of course, we're programmed to be spiteful.

Testosterone is irrelevant. Gender is socially constructed. Biology does not influence human behavior.

Repeat 20 times before breakfast.

Ps. Aren’t these results really old? JEP article by Fehr and Gächter cite Bumhams result in 1998. The Economist is not exactly on the forefront on issues that are less than politically correct†¦

There's no irrationality here, people simply get value from being spiteful. Tyler needs to read his Mises again.

With regard to the high total value ultimatum game split: it's an interesting question. Of course, you can't get someone to give you the grants.

Maybe they should try to get Blizzard (the computer game company) to sponsor the program. Blizzard could generate a few 1,000 gold amounts on World of Warcraft, and the test subjects could all be WoW players. The test would, essentially, be paid for via inflation of their virtual economy.

While 1,000 gold isn't worth $10,000, it's probably worth a hell of a lot more than $10, at least to a dedicated WoW player.

The next stage would be to examine how natural differences in testosterone levels and testosterone-receptor genes in different populations around the world affect cooperativeness.

Aristotle defines anger in terms of someone's failure to accord you the status you deserve.

I guess that would turn out to be testosterone-dependent as well.

Standard advice:

"It's just as easy to fall in love with a rich [girl/boy] as it is with a poor [girl/boy]."

I'm not sure spite is the relevant emotion, but rather an insistence of being treated with respect and not being seen as a pushover -- which could rationally be worth more than the monetary value of the low offer. Yes, participants are told these are anonymous transactions, but people still use their standard 'programs' for striking deals in these situations, I believe.

Nathan_Zook: The game you're talking about, in case anyone is wondering, is Junta. I played that with my friends once. Pretty fun.

I wonder if you'd have different results in Hong Kong vs Berkeley? In other words, how much of this is due to Marxist-think brainwashing?

Of course if those groups were significantly different it doesn't necessarily mean "brainwashing", it could be at least partially selection bias, with those inclined to think like spiteful Neanderthals choosing to locate in Berkeley, and those with more sense choosing to leave ASAP.

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