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Unit 9

Game Theory

9.6 Fairness in Different Cultures

NO ONE EVER SAID LIFE WAS FAIR

What does "fair" really mean? Does it mean the same thing to everybody? Sociologists have been able to explore these questions using the techniques of game theory. Games can serve as one of the essential tools of the sociologist, much as litmus paper serves as a tool for the chemist or a telescope serves as a tool for the astronomer.

First, let's clarify the difference between the terms "rational" and "fair." A rational action, as we have defined it, is one in which a player chooses the strategy with the best chance of producing the most personal benefit, without regard to what happens to the other player. Being fair, on the other hand, takes into account a whole host of other factors, including cultural norms, experience in market transactions, and experience with cooperation. In work done at the turn of the twenty-first century, researchers found that the concept of what is "fair" ranges widely, depending on who's playing. They reached this conclusion after watching how people from 17 different small-scale societies, ranging from hunter-gatherers to nomadic herders to sedentary farmers, played in a variety of cooperative games, such as the Ultimatum Game and the Public Goods Game.

In the Public Goods Game, players are asked to contribute some amount of money to a communal pot, which will be subsequently increased, based on how much everyone gives. In the Ultimatum Game, one player is given a sum of money or other valuable resource and is instructed to share it with another player. The first player decides how much to offer and the second player decides whether or not to accept the offer. If the second player rejects the offer, neither player gets any reward, or benefit.

Let's examine the Ultimatum Game in a bit more detail. Player 1, the Offerer, can offer any amount that he or she chooses. For the sake of simplicity, let's say that the Offerer can choose to offer a high amount (H) or a low amount (L). If he offers H, then he will be left with L if Player 2 accepts the offer, and vice versa. Player 2, the Receiver, always has the choice of accepting or rejecting the offer. With these simplified assumptions we can create a matrix:

Payoff Matrix

It should be evident from this matrix that a rational Receiver will never reject an offer. From the rational Receiver's point of view, receiving L, even if L is of very low value, is better than getting nothing. A rational Offerer will pick the strategy corresponding to the row with the largest minimum payoff. Both rows in this case have the same minimum, 0, so the Offerer should then choose the strategy with the best potential payoff, which will be to Offer Low. In fact, the rational Offerer should offer the smallest amount possible, because the rational Receiver accepts any offer.

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GET REAL

When actual people play this game, however, the results vary widely and are never in line with the rational model. The study found that average offers across all societies range from 25% of the total to more than 50%. Furthermore, many real players will reject offers, even offers of more than 50%. What is perhaps more illuminating is how offers and acceptances depend on the society in which the players live.

Certain groups of people who are very economically independent, at least at the family level, had the lowest average offers. Other groups of people who depend on communal cooperation to gain food, such as in a whale hunt, had mean offers very close to 50%. Still others, in societies in which gift-giving is an act of status, had average offers above 50%. Quite surprisingly, some of these high-offer societies exhibited high rejection rates as well.

Why would someone reject an offer? The answer relates to the psychology inherent in reiterative games. The researchers surmised that people reject offers that are too low because if they accepted such offers, they would develop a reputation for accepting low offers and, consequently, no one would give them higher offers in the future. Also, rejecting an offer turns the tables of power in the Receiver's favor. The Receiver can punish the low Offerer, who has much more to lose in a rejection than the Receiver does. From the Receiver's point of view, it might be worth incurring the cost of losing the low offer if it discourages the Offerer from being so stingy with future offers.

Why would anyone reject a high offer? In certain cultures, gift giving obligates the receiver to return the favor; receivers who do not wish to be obligated to someone else would then reject any offer that seemed to be too big a burden to pay back. These cultural norms were thought to manifest themselves in how people played the Ultimatum Game, as the participants sought to contextualize their experience of the game. In other words, they often asked themselves, "What does this game remind me of?" and then they adjusted their strategy to align with their perception of the situation.

The Public Goods Game and the Ultimatum Game show that what people perceive as being fair depends heavily on their cultural context. In these cases, games served as tools for measuring and quantifying cultural values in the real world. We see that the concept of fairness develops in human societies in relation to their specific needs and values. Game theory can also be used to examine another very human concept, that of language. We will now turn our attention to how ideas from game theory can contribute to the explanation of how language can arise and develop within a group.

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Next: 9.7 Language


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