Sunday, October 14, 2007

The Ultimatum Game and Genes

Greg Mankiw points to research which suggests that our sense of "fairness" may be genetic:

The paper, published in the Oct. 1 advanced online issue of the Proceedings of the National Academy of Sciences, looked at the ultimatum game, in which a proposer makes an offer to a responder on how to divide a sum of money. This offer is an ultimatum; if the responder rejects it, both parties receive nothing.

Because rejections in the game entail a zero payoff for both parties, theories of narrow self-interest predict that any positive amount will be accepted by a responder. The intriguing finding in the laboratory is that responders routinely reject free money, presumably in order to punish proposers for offers perceived as unfair.

To study genetic influence in the game, Cesarini and colleagues took the unusual step of recruiting twins from the Swedish Twin Registry, and had them play the game under controlled circumstances. Because identical twins share the same genes but fraternal twins do not, the researchers were able to detect genetic influences by comparing the similarity with which identical and fraternal twins played the game.

The researchers' findings suggest that genetic influences account for as much as 40 percent of the variation in how people respond to unfair offers. In other words, identical twins were more likely to play with the same strategy than fraternal twins.

More than three years ago I said this about the ultimatum game:
Being offered only one of 10 dollars [in the ultimatum game] is an insult, and accepting an insult isn't worth a dollar, to most people. When someone who is holding 10 dollars offers you only one dollar, that person is sending you a signal about your worth in his or her eyes.
I don't know whether the typical rejection of an insulting offer is genetic. But rejection makes sense, if you consider how people act in "real life" as opposed to being the wealth-maximizers portrayed in economics texts.