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> [...] Imagine two people, one of whom is given $10 and told to propose a way to split the money with another person—a stranger, let's say. The catch is that i

> [...] Imagine two people, one of whom is given $10 and told to propose a way to split the money with another person—a stranger, let's say. The catch is that if the stranger doesn't agree to the deal, they both get nothing. > Economists and psychologists alike love this experiment because it captures an interesting facet of human behavior that appears irrational at first glance. Surely the second man should accept any deal offered by the first. So what if he's offered just a penny? Free money is free money! Who cares if the other guy gets to keep $9.99? Instead, across all cultures and contexts, people reject offers they perceive to be unfair: The details vary, but human beings turn down money with astonishing consistency if they think they're being done dirty. > [...] > "The process of contracting a worker is often close to ultimatum bargaining," explained Elwyn Davies (then with the University of Oxford) and Stanford University's Marcel Fafchamps in a 2016 paper exploring the effects of competition on behavior within the ultimatum game. "The employer specifies a job description and proposes a wage and the worker accepts or rejects." Elwyn Davies and anyone with an economics degree who read that and thought that was a reasonable idea should have their economics degrees revoked until they've worked a minimum-wage job for a year with no other income, because this is incredibly ignorant of economics. Free money is free money, sure. But labor isn't free money. Workers have resources such as ~75-80 years of life, some health, energy, etc., and workers are giving up a portion of those resources to their employer in exchange for money. You don't get those back. Those resources have a value to workers. At some point as wages decrease, those resources become more valuable to the worker than the amount being offered for them. I'm currently in Tennessee. Minimum wage here comes to about $1200/mo. That doesn't cover rent, let alone expenses of a reasonably enjoyable life. I'm very grateful that these aren't my options, but if my options were work 40 hours/week for $1200/mo, or have that time, I'd rather have the time, because that's a more enjoyable life. The things that $1200/mo buys me are simply not worth as much as being able to go on a hike when I want to. That's rational. It's not some irrational human sense of fairness thing, or sticking it to the man, it's the only reasonable reaction to the situation.

jfengel 4y ago
The flip side is that it's tricky to have an enjoyable life on no money. Not impossible, but difficult. The ultimatum game tries to capture that: there are both benefits and disadvantages to rejecting the bargain. The simplified game basically says they're a wash, which isn't true but can be informative anyway. So I don't think rejecting the offer is the only reasonable reaction. You have to figure out what kind of life you'd enjoy. There are ways to do it, but some options (like having children) are nearly closed off.
- kerkeslager 4y ago
  > The flip side is that it's tricky to have an enjoyable life on no money. Not impossible, but difficult. Enjoyable/not enjoyable isn't a binary--it's a spectrum. I think we can agree that both options (working a minimum-wage job and having almost no money, and having literally no money but having freedom) are pretty far toward the "not enjoyable" side of things. My point is that American capitalism has reduced wages so far that having no money is the more enjoyable option. > The ultimatum game tries to capture that: there are both benefits and disadvantages to rejecting the bargain. The simplified game basically says they're a wash, which isn't true but can be informative anyway. No, it is not informative, it's misleading. The part that they leave out--the value of the worker's time, efforts, etc.--is so important that without it, the ultimatum game is completely invalid. This cannot be overstated. The ultimatum game actually gives you wrong information. And the ultimatum game is actually extremely offensive. You're literally devaluing people's lives to zero. > So I don't think rejecting the offer is the only reasonable reaction. You have to figure out what kind of life you'd enjoy. There are ways to do it, but some options (like having children) are nearly closed off. I don't think you're understanding the situation. Working a minimum-wage in Tennessee doesn't open up any options of any importance to the average person. Your example of having children highlights the absurdity of your argument: $1200/mo is not enough money to have a child in a fiscally responsible way. If you do make the mistake of having a child when your options are not working or working a minimum-wage job, not working is clearly the better option: at least that way you can provide childcare instead of abandoning your child for 40+ hours/week. Keep in mind that if you have no other support system, you're literally homeless either way. With roommates, you might actually be able to afford a room for $1200/mo, but that leaves you no money for, you know, food, so you're probably going to be choosing food over housing.

jfengel 4y ago

The flip side is that it's tricky to have an enjoyable life on no money. Not impossible, but difficult. The ultimatum game tries to capture that: there are both benefits and disadvantages to rejecting the bargain. The simplified game basically says they're a wash, which isn't true but can be informative anyway. So I don't think rejecting the offer is the only reasonable reaction. You have to figure out what kind of life you'd enjoy. There are ways to do it, but some options (like having children) are nearly closed off.

kerkeslager 4y ago
> The flip side is that it's tricky to have an enjoyable life on no money. Not impossible, but difficult. Enjoyable/not enjoyable isn't a binary--it's a spectrum. I think we can agree that both options (working a minimum-wage job and having almost no money, and having literally no money but having freedom) are pretty far toward the "not enjoyable" side of things. My point is that American capitalism has reduced wages so far that having no money is the more enjoyable option. > The ultimatum game tries to capture that: there are both benefits and disadvantages to rejecting the bargain. The simplified game basically says they're a wash, which isn't true but can be informative anyway. No, it is not informative, it's misleading. The part that they leave out--the value of the worker's time, efforts, etc.--is so important that without it, the ultimatum game is completely invalid. This cannot be overstated. The ultimatum game actually gives you wrong information. And the ultimatum game is actually extremely offensive. You're literally devaluing people's lives to zero. > So I don't think rejecting the offer is the only reasonable reaction. You have to figure out what kind of life you'd enjoy. There are ways to do it, but some options (like having children) are nearly closed off. I don't think you're understanding the situation. Working a minimum-wage in Tennessee doesn't open up any options of any importance to the average person. Your example of having children highlights the absurdity of your argument: $1200/mo is not enough money to have a child in a fiscally responsible way. If you do make the mistake of having a child when your options are not working or working a minimum-wage job, not working is clearly the better option: at least that way you can provide childcare instead of abandoning your child for 40+ hours/week. Keep in mind that if you have no other support system, you're literally homeless either way. With roommates, you might actually be able to afford a room for $1200/mo, but that leaves you no money for, you know, food, so you're probably going to be choosing food over housing.