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Imagine that you are walking to the post office and there is someone at the top of the stairs who doesn't hold the door for you. I presume that most people would get mad at him, but not so much (I definitely would, because I live in Vermont). Would we get angrier, though, if we see that person hold the door for someone else, ahead of us, and then fail to hold it for us? In other words, does it matter, in our everyday lives, how people we met have treated others in the past? Do we consider an act's kindness and fairness by itself, in isolation? Or do we deem a gesture to be good or bad in the first place by comparing it with other acts?
I want to write about a little experiment which answers these questions. But I will first describe a single game, called the Ultimatum Game. For this game, two people are paired up in the laboratory. One of these people will be a Proposer, and the other, a Responder. The Proposer is given $10. It is the Proposer's job to offer a division of this money between himself and the Responder. For instance, a Proposer might say, "I want $9, and I will send the Responder $1." Anything is possible within the range of $0-$10. The Proposer can propose to keep all of $10, or none of the $10, or anything in between, in whole dollar amounts. So he has 11 options to choose from in terms of the division of the money.
This is not the end of the game though. Now it's the Responder's turn, who wasn't lucky enough to be endowed with the money to begin with. The allocation to roles is a completely random event, so that the Responder could have began with $10 with as much likelihood as the Proposer, but she couldn't.
The Responder has two options available to her, once she sees the offer. She can either accept the Proposer's offer, or reject it. Remember that the Proposer kept $9 in our example, and offered $1. If the Responder accepts this, then both parties would get the proposed division. The Proposer would leave the laboratory with $9 and the Responder would leave the laboratory with $1. On the other hand, if the Responder rejects the offer, then both parties would get $0 and they'd both leave the laboratory with nothing.
This game is called the Ultimatum Game because Responder's rejection power must surely give the Proposer hesitancy when making his offer. If the Proposer offers a low amount, the Responder might reject, and no one would win. Now, why Responder rejects is an interesting facet of this experiment, of course. A Responder can gain nothing by rejecting. Or more precisely, a Responder can gain no monetary payoff by rejecting. But she might restore her pride, or teach the Proposer a lesson, or simply punish an unfair action by sacrificing a dollar. (The fact that in my example the Proposer is a "he" and the Responder a "she" is completely random- I don't mean to suggest that women are more spiteful: This is a no-pun-intended essay)
The Ultimatum Game results show that Responders usually reject offers that are $2 or below; and sometimes people are more fairness oriented and there are those who reject offers that are below $5.
The game I ran with my laboratory participants was a variation, or an extension, of the Ultimatum Game. I had people come into the laboratory, and they randomly sat either on the right hand side of the room, or the left hand side of the room. There was a curtain in between and people didn't see the ones on the other side of the room. I announced that people on the right hand side would be the Proposers and people on the left hand side would be the Responders. Cheery voices from the lucky right, huffs and puffs from the left (no pun intended here either).
I told the participants that there were 8 Proposers and 8 Responders in the room, and we would play this game for 8 rounds, so that in each round each Responder could meet a different Proposer. Say you are Responder 1. In the first round, you will get an offer from Proposer 1. You can accept or reject the offer. Record you round-1-earning on a sheet. Then comes round 2, during which you get an offer from a different Proposer. The Proposers are not in contact with each other, so this new person doesn't know how much you were offered in the first round. He makes his offer. You can accept or reject. And so on, you will make an accept/reject decision 8 times.
Moreover, I told the participants that I would make the information of a Proposer's past offers available to Responders. Let's look at an example. This is the 5th round of the game. You get an offer. The Proposer is offering you $3, keeping $7 of the pie. Do you want to accept this offer, or reject it? Say, you are leaning towards accepting. Or rejecting. Everyone makes their own decision.
But this offer is not presented to you in isolation. The experimenter gives you information about this particular Proposer's "past" or "reputation." Imagine that this Proposer, who is offering you $3 out of a $10-pie, has been more fair to others. He has offered $4, $4, $4 and $3 in the past four rounds (remember this is the 5th round). What would you do now? Are you more likely or less likely to accept the offer?
Or, the opposite scenario. The experimenter brings the information around that this particular Proposer has been more unfair in the past, having offered $1, $2, $1, $1 to the previous four people he'd played with, and he is now offering you $3. Are you more or less likely to accept?
What I found in this experiment is that Responders are more likely to reject an offer if the Proposer has been more fair in the past. If the Proposer offered $1 or $2 to others, a Responder is more likely to accept the $3. If the Proposer offered $4, $5 to others, a Responder is more likely to reject the $3. Maybe you've behaved the same way when you were playing the game in your mind so you can understand how people think.
But what is going on here? Remember that rejection is punishment. The reason why you'd reject $3 in the first place is to teach the Proposer a lesson. By sacrificing your $3, you are depriving the Proposer off the $7. And you are more likely to do this when... this Proposer has been nice to others!
When I told about this experiment to an economist friend, he listened and said, "Well, you just showed that no good deed goes unpunished." And I saw that he was right, and I resented the fact that everything we try to show in social sciences, naively believing that we are saying something new, has somehow been covered by folk wisdom.
