Posts Tagged ‘Fairness’

The Ultimatum Game

July 30, 2014

An important point made in Watts’ Everything Is Obvious is that common sense varies from culture to culture. A good example can be found in the ultimatum game. The game begins with two people. One of them is given a sum of money, say $100. That person is instructed to split the money with the second person. The split can vary from nothing to the entire monetary bundle. The second player gets to accept the offer or to reject it. If the second player accepts the offer, they both leave with their agreed upon splits. If the second player refuses the offer, then they both walk away with nothing. Now from a strictly rational perspective the first player could keep $99 and offer the second player $1 and the second player would agree as $1 should be better than nothing. But the second player does, and the first player should, have some notion of fairness. In research done in the industrialized countries researchers have found that most players propose a fifty fifty split and that offers of less than $30 are typically rejected.

When researchers replicated this game in fifteen small-scale preindustrialized countries across the five continents the results were not replicated. The Machiguenga tribe in Peru tended to offer about a quarter of the total amount and virtually none of these offers were refused. However, the Au and Gnau tribes of Papua New Guinea tended to make offers that were even better than fifty fifty and these hyperfair offers tended to get rejected as often as the unfair offers.

Now if the players from the respective communities were asked why they did what they did, they likely responded that it was a matter of common sense.

The Matthew Effect

July 27, 2014

The Matthew Effect was named by sociologist Robert Merton who named if after a sentence from the Book of Matthew in the Bible, viz., “For those who have, more will be given, and they will have an abundance, but for those who have nothing, even that will be taken away.” Matthew was specifically referring to wealth (the rich get richer and the poor get poorer). And of course this is true. Being born into wealth carries substantial advantages, but Merton was arguing that the rule applied to success in general. Success leads to prominence and recognition. This, in turn, leads to more opportunities to succeed and more resources with which to achieve success. There is a greater likelihood of your subsequent success being noticed and attributed to you, even though others might have played a key role.

Researchers have attempted to study this effect and to differentiate it from individual potential by trying to select pools of people with similar potential and seeing how they develop. However, no matter how carefully researchers attempt to do so, their futures tend to diverge wildly over time, which is consistent with Merton’s theory. It is known that college students who graduate during a weak economy earn less, on average, than students who graduate during a strong economy. This difference tends to persist throughout the students’ subsequent career. And surely the economy in which they graduate is a random effect.

So the common sense notion that an individual’s success is solely due to the individual’s unique attributes is false. Although the individual’s unique attributes do play a role, there are also chance or random factors.