Game Theory And The Evolution Of Fairness
Saturday, July 31, 2010 - 08:28
in Mathematics & Economics
In a classic experiment known as the Ultimatum Game, person A is given 10 coins to split between himself and person B. If person B accepts the distribution, they both keep the coins; if not, no one gets paid. According to Game Theory, the optimal solution is for person A to give himself nine coins and person B one coin——both will end the game richer than when they started. However, played in the wild, the most common distribution is 6-to-4, a ratio seen as fair by both parties. But why? What's the origin of the human idea of fairness? read more