The Ultimatum Game: Economics, Psychology, Anthroplogy, Psychophysics, Neuroscience and now, Genetics

The Ultimatum Game (Güth et al., 1982) is a one-shot bargaining game. A first player (the Proposer) offers a fraction of a money amount; the second player (the Responder) may either accept or reject the proposal. If the Responder accepts, she keeps the offered amount while the Proposer keeps the difference. If she rejects it, both players get nothing. According to Game Theory, the subgame perfect equilibrium (a variety of Nash equilibrium for dynamic game) is the following set of strategies:

• The Proposer should offer the smallest possible amount (in order to keep as much money as possible)
• The Responder should accept any amount (because a small amount should be better than nothing)

The UG has been experimentally tested in a variety of contexts, where different parameters of the game where modified: age, sex, the amount of money, the degree of anonymity, the length of the game, etc. (Camerer & Thaler, 1995; Henrich et al., 2004; Oosterbeek et al., 2004; Samuelson, 2005). The results show a robust tendency: the game-theoretic strategy is almost never followed. People tend to anticipate and make “fair” offers. While Proposers offer about 50% of the "pie", Responders tend to accept these offers while rejecting most of the “unfair” offers (less than 20% of M). Some will even reject “too fair” offers (Bahry & Wilson, 2006)

Henrich et al (2005) studied Ultimatum behavior in 15 different small-scale societies. They found cultural variation, but these variations exhibit a constant pattern of reciprocity: differences are greater between groups than between individuals in the same group. Subjects are closer to equilibrium strategies in 4 situations: when playing against a computer, (Blount, 1995; Rilling et al., 2004; Sanfey et al., 2003; van 't Wout et al., 2006) when players are groups (Robert & Carnevale, 1997), autists (Hill & Sally, 2002) or people trained in decision and game theory, like economists and economics students (Carter & Irons, 1991; Frank et al., 1993; Kahneman et al., 1986).

Neuroeconomics shows that Ultimatum decision-making relies mainly on three areas: the anterior insula (AI), often associated with negative emotional states like disgust or anger, the dorsolateral prefrontal cortex (DLPFC), associated with cognitive control, attention, goals maintenance, and the anterior cingulate cortex (ACC), associated with cognitive conflict, motivation, error detection and emotional modulation (Sanfey et al., 2003). All three areas denote a stronger activity when the Responder faces an unfair offer. When offers are unfair, the brain faces a dilemma: punish that unfair player, or get a little money (which is better than nothing) ? The conflict involves firstly AI. This area is more active when unfair offers are proposed, and even more when the Proposer (compared to when it is a computer.) It is also correlated with the degree of unfairness (Sanfey et al., 2003: 1756) and with the decision to reject unfair offers. Skin conductance experiments show that unfair offers and their rejection are associated with greater skin conductance (van 't Wout et al., 2006). DLPFC activity remains relatively constant across unfair offers. When AI activation is greater than DLPFC, unfair offers tend to be rejected, while they tend to be accepted when DLPFC activation is greater than AI.

A new study by Wallace, Cesarini, Lichtenstein & Johannesson now investigate the influence of genes on ultimatum behavior. The compared monozigotic (same set of genes) and dizigotic ("non-identical") twins. Their statistical analysis identified which of these different factors explains the variation in behavior: genetic effects, common environmental effects, and nonshared environmental effects. They found that genetics account for 42% of the variation in responder behavior: i.e., identical twins are more likely to behave similarly in their reaction to Ultimatum proposition. Thus, sensibility to fairness might have a genetic component, an idea that proponent of the Strong Reciprocity Hypothesis put forth but did not backed with genetic studies. Yet it does not mean that that fairness preferences followed the evolutionary path advocated by SRH proponents:

Although our results are consistent with an evolutionary origin for fairness preferences, it is important to remember that heritability measures the genetically determined variation around some average behavior. Hence, it does not provide us with any direct evidence with regard to the evolutionary dynamics that brought it about (Wallace et al., p. 15633)

Of course the big question remains : how is it that genes influence the development of neural structure that control fairness preference and reciprocal behavior? A question for evo-devo-neuro-psycho-economics !

Related posts:

• More than Trust: Oxytocin Increases Generosity
• Altruism: A Research Program
• Testosterone and Ultimatum Behavior
• The Psychopath, the Prisoner's Dilemma and the Invisible Hand of Morality
  

Links:

• Wallace, B., Cesarini, D., Lichtenstein, P., & Johannesson, M. (2007). Heritability of ultimatum game responder behavior. Proceedings of the National Academy of Sciences, 0706642104. [Open Access Article]
  
  
• Genes influence people's choices in economics game (MIT news)
  Except:
  

  "Compared to common environmental influences such as upbringing, genetic influences appear to be a much more important source of variation in how people play the game," Cesarini said.
  "This raises the intriguing possibility that many of our preferences and personal economic choices are subject to substantial genetic influence," said lead author Bjorn Wallace of the Stockholm School of Economics, who conceived of the study."

  
  
  References:
  
  
  • Bahry, D. L., & Wilson, R. K. (2006). Confusion or Fairness in the Field? Rejections in the Ultimatum Game under the Strategy Method. Journal of Economic Behavior & Organization, 60(1), 37-54.
  • Blount, S. (1995). When Social Outcomes Aren't Fair: The Effect of Causal Attributions on Preferences. Organizational Behavior and Human Decision Processes, 63(2), 131-144.
  • Camerer, C., & Thaler, R. H. (1995). Anomalies: Ultimatums, Dictators and Manners. The Journal of Economic Perspectives, 9(2), 209-219.
  • Carter, J. R., & Irons, M. D. (1991). Are Economists Different, and If So, Why? The Journal of Economic Perspectives, 5(2), 171-177.
  • Frank, R. H., Gilovich, T., & Regan, D. T. (1993). Does Studying Economics Inhibit Cooperation? The Journal of Economic Perspectives, 7(2), 159-171.
  • Güth, W., Schmittberger, R., & Schwarze, B. (1982). An Experimental Analysis of Ultimatum Bargaining. Journal of Economic Behavior and Organization, 3(4), 367-388.
  • Henrich, J., Boyd, R., Bowles, S., Camerer, C., E., F., & Gintis, H. (2004). Foundations of Human Sociality: Economic Experiments and Ethnographic Evidence from Fifteen Small-Scale Societies: Oxford University Press.
  • Henrich, J., Boyd, R., Bowles, S., Camerer, C., Fehr, E., Gintis, H., McElreath, R., Alvard, M., Barr, A., Ensminger, J., Henrich, N. S., Hill, K., Gil-White, F., Gurven, M., Marlowe, F. W., Patton, J. Q., & Tracer, D. (2005). "Economic Man" In Cross-Cultural Perspective: Behavioral Experiments in 15 Small-Scale Societies. Behavioral and Brain Sciences, 28(6), 795-815; discussion 815-755.
  • Hill, E., & Sally, D. (2002). Dilemmas and Bargains: Theory of Mind, Cooperation and Fairness. working paper, University College, London.
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  • Rilling, J. K., Sanfey, A. G., Aronson, J. A., Nystrom, L. E., & Cohen, J. D. (2004). The Neural Correlates of Theory of Mind within Interpersonal Interactions. Neuroimage, 22(4), 1694-1703.
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  • Samuelson, L. (2005). Economic Theory and Experimental Economics. Journal of Economic Literature, 43, 65-107.
  • Sanfey, A. G., Rilling, J. K., Aronson, J. A., Nystrom, L. E., & Cohen, J. D. (2003). The Neural Basis of Economic Decision-Making in the Ultimatum Game. Science, 300(5626), 1755-1758.
  • van 't Wout, M., Kahn, R. S., Sanfey, A. G., & Aleman, A. (2006). Affective State and Decision-Making in the Ultimatum Game. Exp Brain Res, 169(4), 564-568.
  • Wallace, B., Cesarini, D., Lichtenstein, P., & Johannesson, M. (2007). Heritability of ultimatum game responder behavior. Proceedings of the National Academy of Sciences, 0706642104.