 I'm sorry this video is so late guys, I've been pretty sick with COVID. I thought about just powering through and recording, but when a virus makes you a coffer, you can't amuse. Economists are infamous for being mystified by experimental results that non-economists find obvious. One such finding comes from an experiment called the Ultimatum Game. Player one is handed a stack of cash, say $100, and told to split it any which way they like with player two, with one little hiccup. If player two turns down the deal, neither player gets anything. From the standard homo-economicist angle, where all rational actors are trying to maximize their individual gains, both players' behavior should be well-defined. Player one offers a split of 99 to 1 to get the most they can out of the game. Player two weighs their options, decides that $1 is more than $0 and accepts the offer, bingo-bango. But that's not usually how it goes down. Most of the time, people tend to offer a 50-50 split of the money, and if that split ever dips below 70-30, player two is likely to reject it. These results are robust across many different cultures and dollar values, implying there's something else going on here beyond a straightforward analysis of how to make the most money from the game. Many explanations have been advanced for this behavior. Some researchers suggest that players simply lose control when presented with an obviously unfair split and angrily mash the reject button, despite knowing on some level that it's not in their best interest. Others imagine that there might be some psychological harm inflicted by accepting a woe offer, so rejecting it if that harm gets bad enough might be a better payout. These explanations are possible, I guess, but they don't seem to square with how it feels to be the person who chooses to reject a lopsided deal, as so many folks do. If you put yourself in the shoes of someone faced with that sort of offer and telling player one to go get stuffed, does it feel like you're out of control? Does it feel like you're trying to protect your vulnerable psyche? Or does it feel more like righteous justice? One proposed explanation for people's seemingly self-sabotaging behavior in the ultimatum game is more in line with that feeling of karmic retribution. The strong reciprocity theory suggests that human psychology tends to follow a sort of virtuous or vicious cycle when it comes to cooperation, an exaggerated evolutionary tit-for-tat sort of approach. A strong reciprocator will go out of their way to make sure that selfish jerkwads are punished, even at great cost, to rob them of the resources they might gain by playing dirty, nullifying any incentives against cooperation. On the other hand, if they're a sharing sort, then a strong reciprocator would go out of their way to reward them handsomely for playing fair. That makes some sense from an evolutionary perspective. We're social creatures and we rely on each other a great deal to survive and flourish. A psychological bias to encourage cooperative behaviors wouldn't be the craziest thing I've heard. It's a neat theory, but it seems to fall down on that second half. In 2012, Toshi Yamagishi's research team compared the behavior of players across a few different economic games and found that people who tended to reject unfair splits in the ultimatum game weren't really falling over themselves to reward cooperation in other games, like the prisoner's dilemma or the trust game. As per the paper's title, the researchers find this asymmetry suggestive that the ultimatum game is no evidence of strong reciprocity, but they do propose an alternate explanation. What if our tendency to punish those who split things unfairly, even if it costs us, isn't a vague bias towards cooperation, but a survival strategy to avoid getting trapped under someone's thumb? Yamagishi at all explicitly framed their theory in terms of subjugation, noting that people who reject ultimatums are also loath to be pushed around in other contexts. When Player One offers a one-sided split, they argue that this is something like an assertion of authority, wielding power in a casually selfish way that presumes Player Two's compliance and unwillingness to suffer adverse consequences. I get to divide the money up however I want, so you'll take this one dollar and like it, niner niner. The rejection of an ultimatum is a mechanism for Player Two to fight back against this power dynamic, at some personal cost. Even if it would be beneficial in the short term for them to take whatever scraps are thrown their way, settling into a pattern where that's the default interaction is ultimately going to cost them everything Player One doesn't feel like granting them out of charity. In this light, rejecting an ultimatum isn't about cooperation, it's a refusal to be bullied. Now I want to take a step back here and put a big ol' asterisk on what's to follow. The brute simplicity of the ultimatum game is helpful because we can contrast a surprising result with some very straightforward story about how it should have gone, and it's so abstract that it could be a metaphor for anything. But that same simplicity means that those results can't be trusted once you add the complexity of the real world back in. It's well and good to look at something like the prisoner's dilemma and wonder if it really says something about our society, but presuming that it contains deep truths about how, say, prisoners will or ought to behave in certain situations is a mugged game. Game theory is charming and a powerful metaphor for all sorts of real life situations, but it is not real life, and its dictates should be handled with the same skepticism and interpretive impartiality as aphorisms, like never look a gift horse in the mouth. So keeping that skepticism firmly in sight, let's squint and look at Yamagishi Adol's interpretation of the ultimatum game out the corner of our eyes to try to find some analogous scenarios. Negotiating a deal is an obvious example of the logic. Everyone knows, or ought to know, that whether you're haggling over a drill press at a garage sale or negotiating higher wages for your union, you have to be willing and able to walk away, to leave the deal empty handed, even if it stings a little bit. This policy isn't just a confidence-boosting power of positive thinking thing, it's a rule of thumb that changes the strategic landscape of negotiation. Without the walk away guideline, a greedy profiteer might try to push their luck to extort every last cent they can. But if everyone knows the rule, and everyone knows that everyone knows it, and so on, there's a mutual understanding that if someone pushes too hard, there will be irrevocable consequences, which can discourage unfair dealers before they get going. Bullying is another good example. A schoolyard bully can inflict considerably more harm than can be visited on them by any of their victims, and they use that power dynamic to extract a protracted series of concessions, like lunch money or supplication over years. A time-honored technique for dealing with bullies is to embrace that harm, to endure thrashing rather than bend to their demands. This isn't justice by any means, but where extracting lunch money is free if you can get away with merely threatening violence, now there's some real cost associated with it, and the bully might decide that it's simply not worth the hassle anymore. There's an instantaneous cost for the victim, one lump sum, if you will, but it might be less of a drain than living in fear until someone either grows up or moves to a new school. There are many other situations where the ultimatum game can be a useful mental framework. Utility monsters, politics, terrorism, and board games can all be thought of in these terms. Again, the power of game theory's abstraction and generality is also a sickly teal. It's very easy to apply it to all sorts of situations, whether or not it actually holds, and we should be exceedingly skeptical when we rip all the nuance off the world to look at it like a matrix of payoffs. Still, I think it's worth meditating on the seemingly human tendency to reject inequity, even if it comes at some personal cost. Maybe that tendency isn't based in some deep-seated evolutionary urge to be part of a big happy cooperative family. Maybe it's as simple as refusing to be held hostage by anything as trivial as self-interest. Can you think of any other situations that map cleanly to the ultimatum game? Do you think Yamagishi's research crew have hit on a reasonable answer as to why humans tend to reject unfair splits? Please, leave a comment below and let me know what you think. Thank you very much for watching. Don't forget to ball-ball-subscribe-blah-share and don't stop thunking.