An international team of researchers has provided
Press statement Warwick University
A study by Eugenio Proto, an economist from the Centre forCompetitive Advantage in the Global Economy (CAGE) at theUniversity of Warwick and two other co-authors, looked atdecision-making and how it was influenced by people’s perceptionsof fairness.
Researchers set up a game between two people where one person(the proposer) offers to split £10 between themselves and theirpartner, with the proposer able to decide the exact amount he orshe is willing to offer.
If that amount is not accepted by to the second person (theresponder) then neither gets any money.
Known as an ultimatum game, this kind of set-up is frequentlystudied by economists – but for the first time the CAGE experimentintroduced an element of inequality via an increasingly-biasedrigged lottery to decide who becomes the proposer, the stronger ofthe two positions.
Greater acceptance of inequitable outcome
It makes sense that when people see clear-cut unfairness, theyare less likely to accept it – and this was shown in theresults.
When the opportunity to become the proposer was 50 per cent -i.e completely fair – responders on average rejected an offer bythe proposer of £2.15 or less.
And when the chance of becoming the proposer was rigged at 0 percent – i.e complete inequality – responders rejected offers of£2.96 or less.
But when just a one per cent chance of becoming a proposer wasintroduced – i.e the lottery was still vastly rigged biased in theproposer’s favour – responders rejected offers of £2.53 orless.
In other words the difference between having absolutely nochance and having just a one per cent chance was valued at 43p(£2.96 – £2.53) – proportionally much larger than the 38p value(£2.53 – £2.15) given to the gap between 1 and 50 per cent.
Implications for society?
Dr Eugenio Proto, Associate Professor of Economics at theUniversity of Warwick, said he was surprised to discover thisquirk in human decision-making.
“When you look at it rationally, it makes no sense that peopleare placing such a disproportionate value on that first one percent increase in opportunity. But that slight increase in fairnessseems to have some kind of symbolic meaning. It appears people arehappy to accept extreme inequality when they have this tiny carrotdangled in front of them,” Dr Proto stated.
“We’ve got to remember that our experiments are conducted in alab at a university, not in the real world which is far morecomplex. But these results could shed light on why people living inunequal societies aren’t more vocal in rejecting unfairness. Itseems that even if people believe they have just the tiniest ofchances to become the next Bill Gates, it’s enough to keep themtolerant of obvious inequality,” he continued.
Anirban Kar of the Delhi School of Economics, one of the othertwo co-authors, added: “It makes sense that when people seeclear-cut unfairness in the system, they are more likely to rejectan unequal outcome than if the same outcome was generated by a fairsystem. Participation in the system, surprisingly enough, even asymbolic one (a modicum of voice) seems to have a significantimpact”.
The research paper