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The economics of sharing

One of the two feature stories in the February 16 issue of Science News, "A Fair Share of the Pie" (which I am afraid is only viewable with a subscription), describes the results of a study that examined the extent to which members of different societies act out of economic self-interest.

The study entailed asking participants from 15 "small-scale societies," in 12 countries, to play various economic games (part of "experimental economics"). The game that seems most relevant is the "ultimatum game," in which each of two participants is given a relatively large sum of money. The first player offers the other as much of his portion as he wishes. The second has the option of either accepting the offer, or refusing it. If he refuses, both players lose everything.

According to traditional economic theory (according to Science News, I should say), each player should make the decision that best serves his own interests: The first player should offer as little as possible, and the second shouldn't refuse any offer, no matter how small (after all, something is better than nothing). The project, however, discovered that:

Nowhere do individuals behave out of pure self-interest, whether they live in college dorms or thatched huts. In one group after another, a person given a chunk of money or other valuable stuff tends to offer a substantial, although highly variable, share to an anonymous partner. Moreover, the partner often rejects any offer perceived as too low and contentedly departs empty-handed.

The article continues:

Cross-cultural results indicate that economic games tap into collective notions of what makes for a fair transaction. These flexible rules of thumb for sharing resources run circles around any brute instinct for self-interest.

In economic games, members of societies that feature lots of bargaining and bartering gravitate toward dividing available goods equally. Communities in which families are isolated come closest to exhibiting the traditional economic model.

That's interesting. The thing is, people obviously place some value on sharing (and some negative value on being greedy). It didn't seem to me that the study confirmed or examined just how "contendedly" those participants who walked away empty handed did so, but I think it is an insightful remark. That is, people feel that they preserve or gain something of value when they behave in a certain way. Whatever that thing is, while it doesn't traditionally belong within the proper domain of economics, it obviously plays a role in how people exchange goods.

[If you would very much like to read the Science News article for yourself, let me know, and I'll email it to you.]

Addendum: This article (which is also, alas, only available to subscribers at this time) from the Economist describes a result from a paper in the February issue of Annales d'Economie et de Statistique, which suggests that people are willing to spend their own money just to cost others more. Even at as high a cost as $0.25 of their own money for $1 of another study participant's, 62 percent of the participants preferred to pay their own money than allow the other participant to keep his.

I guess people are competitive. Well, duh. I guess people are really competitive.

February 20, 2002 5:30 PM

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