{"id":348,"date":"2016-03-04T23:30:47","date_gmt":"2016-03-05T04:30:47","guid":{"rendered":"http:\/\/commoncents.blogwyrm.com\/?p=348"},"modified":"2016-03-05T14:35:58","modified_gmt":"2016-03-05T19:35:58","slug":"more-than-an-ultimatum","status":"publish","type":"post","link":"https:\/\/commoncents.blogwyrm.com\/?p=348","title":{"rendered":"More than an Ultimatum"},"content":{"rendered":"

A while back I wrote on the Ultimatum Game<\/a>, an experiment in the psychology of behavior in the marketplace which showed that people rarely act purely in their material self-interest.\u00a0 More often, they balance the possibility of material gain against the other, less tangible or intangible factors, such as self-esteem and pride.<\/p>\n

The premise of the game is that two people are put into the situation where they stand to both benefit materially by splitting a sum of money between them.\u00a0 The catch is that the details of the split can\u2019t be negotiated.\u00a0 One person is granted the authority to propose a split (e.g. 50-50, 90-10, etc.) and the other is granted the authority to either accept or reject the proposal.\u00a0 Acceptance nets both parties the agreed-upon sums.\u00a0 Rejection makes both parties walk away empty-handed.\u00a0 Classical economic theory predicts that the deal is accepted in all cases where the second party stands to receive something in the way of a split \u2013 that is to say when the split is anything other than 100-0.\u00a0 Real experiments with real people suggest that splits far from equitable (i.e., 50-50) have little chance of succeeding despite the fact that the second person stands to walk away with a material gain.<\/p>\n

One of the criticisms leveled against the outcome and analysis of the Ultimatum Game is that the stakes may be too low to really make a difference.\u00a0 After all, the argument goes, most of the real world experiments are done with sums like $100, which is, relatively-speaking, chump-change.\u00a0 Economists and psychologists have attempted to address this critique by normalizing the results by offering the same sums in different economic scenarios, like the third world, where $100 has significantly more buying power than in the US.\u00a0 Nonetheless, the critique that the game hasn\u2019t really been played for high stakes is a valid concern.\u00a0 Perhaps there is a mind-bogglingly large sum for which even a 90-10 split will be always accepted.<\/p>\n

Well, Shankar Vedantam, of NPR, ties the Ultimatum Game to one of the biggest stakes out there \u2013 the negotiations on climate change.\u00a0 The report, entitled The Psychological Dimension Behind Climate Negotiations<\/a>, aired on NPR the week of Nov. 24, 2015.\u00a0 In it, Vedantam argues that the same psychology seen in the Ultimatum Game explains why countries with the most to lose by adverse climate change may actually walk away from a deal that benefits them.<\/p>\n

To back up this claim, Vedantam called upon the expert testimony of David Victor, a professor in the School of Global Policy and Strategy at UC San Diego and the director of the UCSD Laboratory on International Law and Regulation.\u00a0 Victor, who has published extensively on the politics of climate change, had this to say about the interplay of gain and fairness<\/p>\n

Look at the last big conference on climate change in Copenhagen in 2009, where a deal was on the table. The least developed countries refused to accept that deal because they thought the deal was unfair, and they felt they had been left out of the room when the deal was negotiated. And so they were willing to walk away from something that would've been better than nothing, precisely because they thought it was unfair.<\/p>\n
\u2013 David Victor<\/div>\n<\/div>\n

 <\/p>\n

In other words, despite the fact that each of these negotiators represents millions of people, and that they are, ostensibly, rational professionals, they are still human beings who value fairness over material rationality.\u00a0 In fact, according to studies cited in the report, professionals may actually value fairness more, especially when negotiating with other professionals.<\/p>\n

That may be true, but I suspect that the answer is closer to a point touched upon by Vedantam himself later in his report, although he muddled up the thinking.\u00a0 Said he, when asked about the fairness component of the climate-change negotiations<\/p>\n

I think this goes back to the ultimatum game we just talked about, Steve, which is that countries don't always do what's in their rational self-interest if they feel the outcome is unfair. I think many poor countries feel that rich countries - such as the United States and countries in Europe - have had a century or more to industrialize and build up their economies. And as a result of doing so, they have pumped these greenhouse gases into the air that have caused climate change. And these countries feel, hang on a second; you're now telling us that we have to control greenhouse gas emissions just at the point at which we are starting to industrialize. That's not fair.<\/p>\n
- Shankar Vedantam<\/div>\n<\/div>\n

 <\/p>\n

A careful reading of the above quote can actually lead to a different interpretation.\u00a0 Perhaps the \u2018poor countries\u2019 (developing countries) recognize a greater rational self-interest in continuing to industrialize than in limiting their growth in order to limit their carbon emissions. Unlike the Ultimatum Game, where the outcome is clear cut \u2013 walk away with some cash or no cash \u2013 the situation in climate negotiations is quite different. The developing countries must decide between two options, each with both a gain and a loss.\u00a0 So it is entirely possible that they have a rational reason for refusing a deal that benefits them in one sphere but harms them in another.<\/p>\n","protected":false},"excerpt":{"rendered":"

A while back I wrote on the Ultimatum Game, an experiment in the psychology of behavior in the marketplace which showed that people rarely act purely in their material self-interest.\u00a0... Read more ><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-348","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/commoncents.blogwyrm.com\/index.php?rest_route=\/wp\/v2\/posts\/348","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/commoncents.blogwyrm.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/commoncents.blogwyrm.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/commoncents.blogwyrm.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/commoncents.blogwyrm.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=348"}],"version-history":[{"count":4,"href":"https:\/\/commoncents.blogwyrm.com\/index.php?rest_route=\/wp\/v2\/posts\/348\/revisions"}],"predecessor-version":[{"id":357,"href":"https:\/\/commoncents.blogwyrm.com\/index.php?rest_route=\/wp\/v2\/posts\/348\/revisions\/357"}],"wp:attachment":[{"href":"https:\/\/commoncents.blogwyrm.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=348"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/commoncents.blogwyrm.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=348"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/commoncents.blogwyrm.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=348"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}