Fairness Games

Exploring Fairness and Behavior in Economic Games

Danny, Jack, and the author question whether individuals are willing to economically punish those who behave unfairly. They devise experiments based on economic games to gain insights into human notions of fairness and retaliatory behavior.

The Ultimatum Game involves a Proposer who offers a share of a monetary "pie" to a Responder. According to standard economic assumptions, a rational Responder should accept any positive offer. However, findings demonstrate that offers below 20% of the pie are typically rejected, indicating a strong preference for fairness over pure economic gain.

The Dictator Game presents a single player with the opportunity to divide money between themselves and another anonymously. The results surprisingly show that most individuals chose to split the money equally, displaying altruistic behavior contrary to selfish economic predictions.

The Punishment Game follows by asking participants to choose between splitting money with a "fair" or an "unfair" individual from the Dictator Game. Remarkably, the majority preferred to share with the fair individual, even at a personal cost, underscoring a communal endorsement of fair behavior.

Additional Insights from Economic Game Theories: - Despite theories suggesting that increasing stakes might lower the relative value of fairness, actual experiments contradict this, revealing consistent rejection of low offers regardless of the amount. - Public Goods Game and the classic Prisoner’s Dilemma further highlight that humans often act against their selfish interests to support communal benefits or uphold fairness, challenging assumptions that economic behavior is driven purely by self-interest.

Implications on Human Nature and Economics: - People are not just influenced by material benefits but also by moral considerations and societal norms of fairness. - The willingness to engage in cooperative behavior, and to punish non-cooperators, suggests a complex social interplay that extends beyond simple economic models. - Cooperative tendencies can be sustained through mechanisms such as reputation management or punishment systems that counteract selfish behavior, fostering more stable cooperative environments.

These findings encourage a refined perspective on economic behavior that champions a broader understanding of human social interactions, going beyond traditional self-interest based models.