Interesting social experiment: The Price of Greed

[TXlib]

I forget the source in which I read of this experiment, but it was called something like "The Price of Greed".

The scientist takes two volunteers (A and B) who don't know each other, and puts them in separate rooms. They are both told the rules of this game. There is a prize of $100. A gets to choose how to split the pot with B (A can choose to give $5 to B, keeping the remaining $95, for example, or any other split she chooses). B can either accept or reject the split. If B accepts, both A and B get the money, in the agreed-upon proportions. If B refuses, the game is over, and they both leave with nothing. They leave through separate exits, and will never meet each other.

This experiment was run with $100 for real, and then, the subjects were asked how it would have gone with a pot of $1,000, or $1,000,000.

I have three questions for you:

1. As A, what would you offer B?
2. As B, what is the least you'd accept? (Out of $100, $1,000, and $1,000,000)
3. What do you guess the researchers found was the average answer to question 2?

[DrPepper]

1. So B Knows?

So B knows what the split is? I thought maybe B had to decide without knowing the split.

1. 50/50 (to maximize my chances of getting money, and I'm not a greedy bastard)
2. 100 - I'd only accept 50% or greater for me.
1000 - I'd accept 40% or greater for me.
1,000,000 - I'd accept 10% or greater for me (but I'd be pissed).

[TXlib]

2. B knows what the split is.

B knows the size of the total pot, and the fraction being offered him.

I'll reserve comments on your choices until more people have chimed in.

[TXlib]

6. So...

If a $100 pot were up, you'd turn down $30? (30%)
If a $1,000 pot were up, you'd turn down $100? (10%)
If a $1,000,000 pot were up, you'd turn down $10,000? (1%)

$10,000 is a fair chunk of change. Why would you turn it down?

[LearnedHand]

3. This is a retelling of the famous...

..."Prisoner's Dilemma," an economic strategy (based on game theory) in which all parties win (win/win), but not everything they want, and none of the parties lose (win/lose or zero-sum game). Many researchers have proven the efficacy of this "game" in many fashions. Here are a couple of interesting links:

http://pespmc1.vub.ac.be/PRISDIL.html

http://serendip.brynmawr.edu/bb/pd.html

[TXlib]

5. No, this is not the prisoner's dilemma

There is some game theory involved in this, but it's not the same.

Here's an example of the prisoner's dilemma:

Two retail competitors can advertise by newspaper or TV. TV is more effective than newspaper, but MUCH more expensive. Each retailer would like to advertise only by newspaper, but is afraid of losing out to his competitor, who may advertise by TV. They agree to advertise by newspaper only, but each is worried the other will cheat. Here is a payout matrix for the two.

(TV means TV and newspaper; NP means newspaper only)

A\B | TV | NP |
-----------------------
TV | 50\50 | 100\20 |
-----------------------
NP | 20\100 | 80\80 |
-----------------------

If A and B advertise by TV and Newspaper, they both only make $50. (Total: $100)

If one cheats, the cheater makes $100, and the other only makes $20. (Total: $120)

If they both stick to the agreement, the both make $80. (Total: $160)

The most combined wealth is generated if neither cheat. However, if either considers the payoff chart, he realises that no matter what his competitor does, he will do better if he cheats.

Conclusion: Both will cheat. (We're assuming this is a one-time game. If it's run several times, so reputation becomes important, they are both likely to stick to the agreement.)

[JohnKleeb]

4. ok

1. 50$ 50/50
2. 40, 400, and 400,000
3. dunno but sig higher than me I bet.

[TXlib]

7. See my post #6, above.

Out of a $1,000,000 pot, you would really turn down, say, $50,000?

[Exultant Democracy]

9. if I knew that some jerk

in the other room was going to walk off with almost a mil and he was offering me 10,000 I would probably say screw him and not accept the offer.

[TXlib]

14. It would be interesting to see

how you would react if it were REAL money being considered.

I think you would find $10,000 harder to turn up than you'd like to believe.

And how do you KNOW the other guy is a jerk? You know nothing about his circumstances. How do you know his daughter doesn't have some rare disease and he's burning through money like crazy.

This was the point of the experiment; to find out how much it was worth to people to "punish" others for their greed.

Actually, the experiment, now that I think of it, was called "The Price of Greed and Envy".

[JohnKleeb]

11. come to think of it no you are right 50K would be great

My bad in fact I will be damned honest 25K would be good even. I am wrong.

[TXlib]

16. So, what's the minimum you'd take on a $1,000,000 pot?

Would you turn down $100?

[JohnKleeb]

18. hmmmm

a 100 I might accept that.

[qandnotq]

10. that's pretty hardcore

suppose you were offered $350,000 in the million dollar game. you would turn it down, just to punish someone else? (it's less than your $400,000 limit). remember, you have no clue who the other player is; you'll never meet them; you don't get to play again. you can walk away with $350,000 for doing nothing, or you can walk away with $0 to punish your anonymous partner for not offering you more. would you really turn down all that money in real life?

for me, it would be $30, $50, $1000.

[leftyandproud]

8. in all circumstances..

I'd give the other guy 50% of the pot--not because I'm super generous, because I'm afraid he's be pissed and neither one of us would get anything. I'd be happy with $50, rather than trying to give him $5 and walking away with nothing.

And if I were on the receiving in, I'd accept any amount--It's free money.

[DrPepper]

12. Even 1 Cent?

What if you were offerred 1 penny out 100 or 1,000,000? I'd say 99.9% of people would say screw you Mr. A.

[SOteric]

13. Hmmm.

Well, if I were A, I'd probably offer 50/50. Because it's equitable, and B's role is equal to my own.

As B, I'd accept any offer. As any amount of cash would grant me more than I'd had walking in, and more than I expected to have walking out. Albeit that any arrangement that left A with $95 and me with $5 would definitely lead me to think poorly of A.

I don't know what researchers found was the average answer to question 2, so a wild-ass guess would be maybe the 50/50 split?

[TXlib]

15. They found that

B accepted, on average, no less than 35%.

[SOteric]

17. Ah.

Interesting. :shrug: Like I said, even 5 bucks is 5 bucks more than if B declines the offer and the both get nothing. I wonder what the typical thinking is on preferring everyone get's bupkis to "I get a free shortstack at the local IHOP."

[buddhamama]

19. interesting

okay answers

1)as A i would offer B half of whatever dollar amount we're working with

2)five dollars is the least amount i'd take

3)Half

[TXlib]

20. Now let's put a different twist on it.

Let's say the researcher Put A and B in different rooms, and told B, here's $5, But if you take the money, A gets $995. And A did NOT decide the split; it was a random number generator that B activated.

[TXlib]

21. morning kick