Economic theory has traditionally worked on the assumption that human
behaviour could be explained largely in terms of an inherent tendency to
maximize material self-interest. But a series of experiments using economic
games have now shown how far from the truth this is.
In the ‘ultimatum game’, volunteers are randomly paired but remain anonymous to each other and do not meet. A known sum of money is given to the ‘proposer’ who then divides it as he or she pleases with the ‘responder’. All the responders do is merely accept or reject the offer. If rejected, neither partner gets anything, but if it is accepted, they each keep the shares of money offered.
They play this game only once, so there is no point in rejecting a small offer to try to force the proposer to be more generous next time – they know there isn’t going to be a next time. In this situation, self-interested responders should accept any offer, however derisory, and self-interested proposers should offer the smallest positive amount, just enough to ensure that a responder accepts it.
Although experiments show that this is exactly how chimpanzees behave, it is not what happens among human beings. In practice, the average offer made by people in developed societies is usually between 43 and 48 per cent, with 50 per cent as the most common offer. At direct cost to ourselves, we come close to sharing equally even with people we never meet and will never interact with again.
Responders tend to reject offers below about 20 per cent. Rejected offers are money which the responder chooses to lose in order to punish the proposer and prevent them benefiting from making a mean offer. The human desire to punish even at some personal cost has been called ‘altruistic punishment’, and it plays an important role in reinforcing co-operative behaviour and preventing people freeloading.
Although the studies of how people played the ultimatum game were not concerned with the levels of inequality in each society, they are, nevertheless, about how equally or unequally people choose to divide money between themselves and someone else. They are concerned with what people feel is a proper way to treat others (even when there is no direct contact between them and they bear the cost of any generosity). The egalitarian preferences people reveal in the ultimatum game seem to fly in the face of the actual inequalities in our societies.