Jan 27 2009, 8:03AM
by Bart Wilson
A couple of days ago, I wrote a post on fairness, and what the odd history of the word might mean for markets. The esteemed James Surowiecki, whose book I use in the classes that I teach,
wonders whether it really matters that only English has the specific word "fair", given that people around the world make similar decisions in the ultimatum game.
It's less interesting to me that people nearly universally offer (and accept) more than $1; the benchmark of a game-theoretic automaton is a low standard. The only people I've seen do that for real stakes are graduate students in economics, and they're an odd bunch whose training has somehow disturbingly supplanted the rules of fairness that ordinary people apply. (Something that's worth remembering as you read the Op-Ed back and forth on the banking bailout.)
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Jan 25 2009, 9:15AM
by Bart Wilson
For the past 25 years experimental economists--of which I am one--have been infatuated with a pie-splitting problem known as the Ultimatum Game. Experimental economists are the hands-on tinkerers of my profession; where other economists attempt to build models from first principles, or extract empirical data from a messy universe, we build our own little universe out of volunteers and computers, and see how our theories work when real people get our hands on them. The Ultimatum Game is so popular because it is simple to explain and simple to run, yet its results involve one of the most complex problems of society: what are we saying when we say something is "fair"?
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