You know those psychology games where there are two people and the first person is given $10 to split between the two of them. They can split $5/$5 or $1/$9 or even $.01/$9.99. Then the second person can either accept the split and take their share or nix the whole deal and no one gets anything.
Aggressive price discrimination reminds me of this game. If I'm willing to pay exactly £20 to see that movie and the movie theatre is charging £19.99 I should take that deal. Even if they're only charging you £9.99 (because your willingness to pay is only £10).
Taking that deal is the right thing to do. Right?
But it turns out in those experiments that if the split proposed is two uneven then the second person will say screw it. No one gets nothing! People have an innate sense of fairness.
The same thing applies to what's going on here. Something about charging people differently based on their User-Agent really rubs people the wrong way. It's a step too far so they just table flip and say screw it.
Is it rational in an homo economicus kind of way? Nope.
Is the the way people actually behave. Yup.
> Is it rational in an homo economicus kind of way? Nope.
I disagree.
It's not rational if you view it as a single transaction ever, but at the moment you begin to think of the relationship as an iterated game of possible transactions, punishing the other party at a cost to yourself can change their future behavior and advantage you over the long run.
So what you're arguing doesn't make sense in a single transaction is actually a good strategy in the iterated environment that the market actually is.
Example: if there's a correlation between you turning down their offer and them making you a better offer in the future, turning down offers in an iterated version of the game you commented on becomes a viable strategy and even rational in some situations.
Ya. It turns out that even in these games where the person running the experiment tells the participants that there will only be one iteration it doesn't change the results any.
That being said I pretty much agree with you. An experiment with a single iteration is very unlike the real world so it's no surprise that participants pretty much ignore that directive.
Even in the case that the game is a single iteration, it doesn't erase the background fact that society still exists and that punishing people for breaking societal norms can enforce societal norms of fairness.
The experiment doesn't control for the fact that even though it's an isolated game, it's still happening in the context of these people being members of society and hence trying to enforce societal norms even in the game. Society is a large pool of random encounters over and over, so the players are making the correct play given that there's no control of that factor, ie, it's not truly a stand alone game.
I find a lot of the analysis of these games from psychologists leave out details like that which make the responses move from irrational to rational.
I don't remember where I saw this, but I believe this has to do with culture. In North America what you described is true, where as in developing countries it is not. The second person would rather just take whatever money is given and run.
If someone can remind me of the name of this game I can find it..
In North America what you described is true, where as in developing countries it is not.
Not true. The game was conducted in "developing countries" as well, and the results seem to be same.
I can't locate the references right now, but a little googling might help (Especially I remember the results being mentioned one of the TED talks.)
I remember at least one case where the game was played, and the person who got to choose took 9 bucks out of 10, and they all thought it was fair, simply because he was lucky to be the guy who got to choose.
edit: it's in the article HaloZero links in this thread.
When he began to run the game it became immediately clear that Machiguengan behavior was dramatically different from that of the average North American. To begin with, the offers from the first player were much lower. In addition, when on the receiving end of the game, the Machiguenga rarely refused even the lowest possible amount. “It just seemed ridiculous to the Machiguenga that you would reject an offer of free money,” says Henrich. “They just didn’t understand why anyone would sacrifice money to punish someone who had the good luck of getting to play the other role in the game.”
Aggressive price discrimination reminds me of this game. If I'm willing to pay exactly £20 to see that movie and the movie theatre is charging £19.99 I should take that deal. Even if they're only charging you £9.99 (because your willingness to pay is only £10).
Taking that deal is the right thing to do. Right?
But it turns out in those experiments that if the split proposed is two uneven then the second person will say screw it. No one gets nothing! People have an innate sense of fairness.
The same thing applies to what's going on here. Something about charging people differently based on their User-Agent really rubs people the wrong way. It's a step too far so they just table flip and say screw it.
Is it rational in an homo economicus kind of way? Nope. Is the the way people actually behave. Yup.