Chapter 6 Chapter 5 "The Selfish" Game

Why do we give money to strangers? Qingmin and Zhou Ni took out all the money in their pockets and bought a piece of delicious-looking chocolate mousse cake, intending to cut it open and eat half of it each.At this point, the problem arises.Although they didn't show it, both of them wanted a bigger piece of cake.Even two people who are very close can't care about friendship and face in front of the mouth-watering cake. Of the two, Qing Min seemed the more active, he cut open the cake and took one of the cakes himself.Although he said that the score was average and there was nothing wrong with it, Zhou Ni clearly showed dissatisfaction.In Zhou Ni's eyes, the half that Qingmin took away was obviously bigger than her own.Qingmin could see that Zhou Ni was dissatisfied, so he said: "I think it was a fair cut, but it made my cake look bigger. Since you are not satisfied, how about we change it?"

Between changing and not changing, it has seriously affected the mood of the two people.The two were also silent while eating the cake, feeling unhappy.It's rare for good friends to eat a piece of delicious cake together, but it actually destroys the friendship between the two.The two left their seats while saying to themselves, "It would be nice to make a little concession, but in the end they showed greed." Because the two divided the cake in the wrong way, disputes inevitably arose.If the cake is divided in other ways, it may satisfy both people.The problem was that Qingmin, who was in charge of cutting the cake, took his own first.Under such circumstances, Zhou Ni probably thought that Qingmin cut the slices unevenly on purpose, and then took the big one.Even if the cuts were the same size, in Zhou Ni's eyes, the piece Qingmin took must be bigger.Because of this, it is difficult to avoid entanglements.

What method can be used to divide the cake so that two people can be satisfied?This method is actually surprisingly simple: let one person cut the cake, and then let the other person choose first.When dividing the cake in this way, if you cut the cake, think about what you would do?Would you intentionally cut one piece bigger and one piece smaller?Or try to cut the same size? As long as you are not a fool, you will not intentionally cut one piece into a big piece and a piece into a small piece.Because obviously the big piece is going to be taken by someone else.Therefore, no matter who they are, they will try their best to cut them into the same size.In this way, neither the person who cuts the cake nor the person who picks the cake first will feel dissatisfied.The result was that the cake was divided fairly and eaten without hesitation.

We could call what we're seeing now a "portion game."However, the game starts with an important premise.The premise is that all participants are rational and selfish economic people.Because even if it is a little bit close, each wants to have a bigger share, so entanglements are inevitable.If both of them have the intention of making concessions, that kind of entanglement would not be possible. The "portion game" that happened to Qingmin and Zhou Ni is just a possibility in real life.In other words, as long as there is a division of shares between rational and selfish people, such a result may occur.But people do not always behave like that. People in reality are different from economic man, so we can see that their behavior is very different from what traditional economic theory says.

We know from experience that people don't always act selfishly.There are often similar situations - deliberately making concessions and giving the other party a bigger share.Although I also have the desire to want a large portion, but because of other more important factors, it is possible to suppress the desire.For example, it is possible to think that face is more important, and take a small portion on purpose.Or, it may be considered unfair to take the larger portion first, so take the smaller portion. There are also selfish people who do not give up small interests.However, it can be seen that most people often make concessions to others when they can act selfishly.Because they value face, fairness, or concern for other people more than their own interests.We are repeatedly confirming similar facts through many experiments.

To test how selfishly people can act, the first instance of the experiment was an "accept or reject game."This game, though also a "portion game," is played in a unique way.The experiment was to see how important selfishness would be in playing the game through the actions of two people. Two people who were the subjects of the experiment had never met before, and the experimenter gave the two people a certain amount of money and asked them to distribute it according to a certain method.Because they are strangers, there is no need to consider things like friendship or face, and they can act according to their own wishes, that is to say, they can act selfishly without any scruples.

What we wanted to know was, would people actually act selfishly in this situation?Is it to give full play to selfishness, or to restrain selfishness?Soon, this experiment showed different results than we expected.It is surprising to see how many people take self-restraining actions when it is okay to act selfishly. In the experiment, 100,000 won was given to these two people and distributed as follows.First, let them draw lots to decide the A and B roles.The person who draws A proposes how to distribute the 100,000 won. For example, each person gets 50,000 won, or they get 70,000 won and the other party gets 30,000 won.

This proposal is known as the "take it or leave it" game.Because the party playing the role of B can only express "agree" or "disagree" on this proposal.If he says "agree", the two will share the money according to that proposal.Instead, he says "disagree," and neither will get a penny because the person in charge of the experiment will take the 100,000 won that was given to them earlier. In the game, a process like this can only be done once.That is, once a proposal is rejected, no other proposals can be made.The person in role B either accepts the proposal or rejects it, and the game ends at that moment.Therefore, the game rules out the possibility of two people discussing some kind of distribution agreement.Not only that, but it is also impossible to adjust one's own behavior while looking at the attitude of the other party.

If you were playing the role of A, what distribution would you propose?Of course, maybe you will come up with an even distribution.But why show kindness to someone you don't even know?Wouldn't it be nice to take this opportunity to fill your own pockets?I don't know if I will regret it later if I show favors for no reason? Assuming that the person playing role A is completely selfish and rational, think about what kind of plan he will propose?If you analyze it from a logical point of view, you can accurately predict what kind of plan he will come up with.First of all, it is clear that he will not propose a plan to take all 100,000 won.Obviously, no matter how selfish a person is, it is impossible to be that greedy.Because rationally, he knows that if he behaves very greedily, the other party will definitely reject the proposal.It is impossible not to give the other party a certain amount of money.

So, at least how much money should be given to the other party, so that the other party will not refuse?If the other party is completely selfish and rational like yourself, then that amount can never be too small.why?Because from the point of view of a selfish and rational person, even a small amount of money is better than nothing.Therefore, even if you get very little money, you will not reject that proposal.If you refuse, there will be such a result-you will not get a penny. For example, the person playing the role of A proposed such a way to divide the money-take 98,000 won for himself and only give 2,000 won to the other party.When the person who played the role of B heard this proposal, he felt extremely angry: "This kid is really stingy and too greedy. Do you want to reject him? If you do that, he will return empty-handed. What can I do with 2,000 won?" Thinking this way, he decided to reject that proposal to take revenge on the greedy opponent.

However, the anger subsided immediately, and as soon as he calmed down, he changed his mind: "No, if you reject that proposal, the 2,000 won will be gone." After analyzing it calmly, it is obvious that it is better to get 2,000 won.While revenge is a pleasure, you must also be willing to accept the loss.There is no doubt about it, is there?While the emotions will continue to cry out to reject that proposal, the rationale will allow you to accept it.So, although he was very angry, he still accepted the proposal rationally. We push this logic to its most extreme cases.That is, the person playing the role of B gets only 1 won, but even in the case of such a proposal, he will not refuse.The case of rejecting that proposal should be that the amount you get is zero. It is axiomatic that one is greater than zero, so he could not have rejected that proposal.If emotional factors are removed, this is only true from a logical point of view. All in all, if you want the other party not to reject your proposal, you must give at least 1 won.Again, the premise of this conclusion is that both people are completely selfish and rational.Now, everyone clearly knows how the game works logically.That is, if we only analyze it from a logical point of view, there should be no doubt about the game process that will be carried out below. First, the person playing role A proposes to divide the money by taking 99,999 won for himself and giving 1 won to the other party.Then, the person playing the role of B accepts the offer.The question is whether this logical prediction matches reality.In other words, do real people really make such choices? Experimental results from the "accept or reject game" showed differences in how people behaved and predicted.Behavioral economists have found the following facts after many rounds of experiments: First of all, it is generally not seen that the person who plays role A comes up with a plan that he owns almost all the money.That is, actions predicted by the preceding logic are extremely rare.In the experiment, many people have a broad mind to give each other at least 40% of the share, and even unexpectedly found that many people proposed to share 1/2 each. The one who holds the initiative in this game is the person who plays the role of A.Regarding your own proposal, the other party can only express agreement or disagreement.Because of this, such take-or-reject proposals can be decisive in how the shares are divided.However, what is interesting is that we see an attitude that we will neither monopolize ourselves, but also leave a large share for the other party.This is powerful evidence that the assumption that people are short-sighted and self-interested does not match reality. This experiment shows that the attitude of the person playing role B is also very interesting.If he is a rational person, it can be predicted that he will accept all offers that result in an amount greater than zero.However, the experimental results were quite different from this prediction.Such a phenomenon appeared in the experiment. Probably when his own share could not reach 20%, character B would reject the proposal, that is, he would reject the proposal without hesitation if he felt that he could not get enough money. What does it mean to feel that the amount you get is too small and refuse without hesitation?This means that people are not just purely concerned about monetary interests.Obviously, because you want to convey a certain message to the other party, you are willing to give up your own monetary interests.The message is that the other party's proposal is unfair, and I will never agree to it anyway. There are also people who take advantage of their vantage point to blindly pursue their own personal interests.That's the type of person who proposes that he owns almost the entire amount of money in this "portion game."It can be seen that feeling indignant towards one party, the other party will act to reject that proposal.This kind of behavior has the meaning of retaliating against the other party's selfish behavior regardless of one's own losses.In our daily life, there are many situations where we make similar behaviors. The remarkable fact that this experiment revealed is that people place fairness above self-interest, which is very important.If you look at economics textbooks, the core force driving people is personal interests.However, people in reality don't only care about personal interests.People often willingly give up their personal interests for important values ​​such as fairness.Traditional economic theory basically regards people as selfish, and it is impossible to accurately predict people's behavior only through traditional economic theory. The "take it or say no game" as it is being described is known in economics as the "ultimatum game".The person in role A makes an ultimatum on how the money will be split, and the person in role B decides whether to accept it.Through the "Ultimatum Game" experiment, it shows the fact that people are not short-sighted and only care about their own interests.This also proves that it is absolutely impossible for people in reality to become fully economic man. In the above-mentioned experiments, the "ultimatum game" mainly used Americans as the experimental subjects.Therefore, it can also be interpreted that the facts discovered through the experiment may also have something to do with the personality of Americans.Again, people are not short-sighted and only interested in their own interests, which can be fully explained by the inherent characteristics of Americans.Would the same results be seen if similar experiments were conducted in other countries? To answer this question, behavioral economists conducted the same "ultimatum game" experiment in many countries.Among them, one example is to compare and analyze the experimental results of Israel, Japan, the United States, and Yugoslavia.When comparing countries with large cultural differences, do cultural differences between these countries really make the experimental results different? The results of this study show that there are some degree of differences in each country, but there is no difference in essence.That is, people are not short-sighted and only care about their own interests. This experimental result is considered universal.This means that under the influence of a particular culture in a society, there are no attitudes that differ from it, that is, that attitudes are common to all people. It is interesting to note that relatively more selfish attitudes emerge among primitive tribes.Experiments were conducted on the Maciganga tribe living along the banks of the Amazon River, and the following facts were observed.In this experiment, the person playing role A offered to give the other party a relatively small amount.As we said earlier, in other experiments, it can be seen that the average share of more than 40% is proposed to the other party.However, in the case of the Machiganga tribe, the largest share offered to the opposing party was also only 26%.That is to say, it can be seen that the person who proposes the proposal has a relatively more selfish attitude. What's more interesting is that, even with such a small amount, very few subjects B rejected the proposal.In other experiments, the share that I got was about 20%, and the person who played the role of B would generally reject the proposal.However, as can be seen in the Machiganga experiment, even rather stingy proposals are accepted without being rejected.It's a different attitude. If you think about it according to common sense, compared with the industrialized society, it is obvious that the Machiganga tribal society has a stronger collective life attribute.In group life, it is common sense to view selfish attitudes as negative.However, according to the experimental results, compared with the industrialized society, primitive tribes have a stronger selfish attitude. But it would be a mistake to interpret the results of this experiment in a more self-serving manner.It should be seen as a result of the unique cultural background.Specifically, it may be that their concept of fairness differs from other societies.Because of this, it is quite possible to offer to give the other party a small share with little guilt. In any case, the results of experiments on the Machiganga tribe are not contrary to the results of experiments in other societies, but there are differences to a certain extent.Importantly, people who play role A in their society also offer to give each other a much larger amount than zero.Totally rational and selfish actions would both come up with amounts close to zero, which they are not.All in all, it reconfirms that people are not short-sighted and only pursuing their own interests, which is a common human behavior. Think about it again, what is the real reason for the person playing role A to offer to give the other party a considerable amount of money?Like we mentioned earlier, probably because of the idea of ​​maintaining fairness between the two.However, there may be other reasons as well.For example, if the amount is too small, I wonder if the other party will refuse?It may also be based on this idea, and propose to distribute more money to the other party.That is, people give more to each other out of fear of retribution from the other. If it is for such a reason to propose to give the other party a larger amount, then the interpretation of the experimental results will be different.Because the premise of proposing to give the other party a larger amount is motivated by self-interest.If the purpose is to persuade the other party to agree to your proposal, then it is impossible to regard it as an altruistic act.It should be seen as an altruistic action taken from a non-altruistic motive. To make this point clear, behavioral economists have made several modifications to the Ultimatum Game and devised another game called the Dictator Game.The person playing role A here can act like a dictator and propose a proposal to allocate money to the other party. In fact, this proposal has the property of unilateral notification, and the person playing role B cannot refuse, but can only agree to this proposal. In this "dictator game", the person making the proposal does not need to bother to think about what attitude the other party will take.In the "Ultimatum Game" we have seen earlier, it is necessary to consider the situation that a proposal with too little share will be rejected by the other party.But now there is no need to worry about such factors, you can act according to your own wishes and fully express your true attitude. Surprisingly, in this game experiment, the dictators were less mean to each other than expected.Although the person playing the role of A proposes a relatively small share compared to the case of the "Ultimatum Game", it is not an extremely small amount close to zero.Looking at this result, we know that in the "Ultimatum Game" experiment, people did not offer to give the other party a considerable amount of money solely based on the fear of the other party's retaliation.Even when there is no need to fear retaliation, people are not stingy, and this emphasis on fairness may serve as good evidence for altruism. Items commonly used by people, such as roads or parks, are called public goods, and public goods also include defense services and security services.Public goods have a unique property that the market cannot afford to produce and supply them.For example, there cannot be a private enterprise providing defense services.Because of this, most public goods are produced and supplied by the government. It will be easier to understand by taking defense services as an example.A company wants to make profits by providing defense services. It first spends huge sums of money to equip defense capabilities, and then begins to sell defense services to citizens.Therefore, a newspaper advertisement was published: If someone pays 5 million won a year, he can get a solid defense.How long can this business last?I am afraid that if I persist for less than a month, I will go bankrupt. Although this enterprise intends to sell defense services, but no one buys this service.Because if other people buy defense services, then they may also benefit from it.As long as someone buys defense services, there is no need to buy them yourself.Not just defense services, but other public goods as well.If someone pays to produce a public good, then people who don’t pay any money can also enjoy the service together, which is the unique property of public goods. Selfish people think that public goods are dispensable.Because in that case, he would not have to bear the cost of producing public goods.Next, if others pay for the production of public goods, he can take the opportunity to share the benefits.Because people know the properties that public goods have, there is nothing wrong with doing that. Photos taken in developing countries show groups of people chasing buses, hitchhikers.In the case of public goods, similar "free riders" are possible.It is because of these "free riders" that the market cannot assume the responsibility of producing and supplying public goods as it does for other products.This is the reason why the defense service companies mentioned above cannot make profits and are forced to go bankrupt. So, are people always going to free-ride when it comes to public goods?Free riding means disregarding the interests of the group in which one is a member, and only focusing on actions taken for personal interests.If it is a completely rational and selfish person, of course he will make such a selfish behavior.However, in reality, if there is a situation where you can free ride, will people really do it? In order to solve this question, we do the following experiment to see.First, form a small group with a certain number of people.Next, distribute a certain amount of tickets to its members. For example, if the group has 10 people, distribute 50 tickets to each person.The purpose of this experiment is to see how each individual uses the tickets. Each person sorts the 50 votes assigned to him in such a way that he puts the votes called "private" into the white box, and puts the votes called "public" into the blue box.If someone casts a vote in the white box (private), he will get 1,000 won after the experiment is over.Conversely, if a vote is cast in the blue box (public), then all members of the group will get 500 won. If I put all 50 tickets into the white box, I will get 50,000 won after the experiment.However, no one else will get any benefit from me.However, if I put all 50 tickets into the blue box, the money I get will be reduced by 1/2 to only 25,000 won, and the other members will also get 25,000 won each because of me.It goes without saying that I get 500 won for every ticket someone puts into the blue box. What does it mean to vote in the white box or the blue box?Voting in the white box means a selfish act that only wants to get 1,000 won.Instead, voting into the blue box involves the idea of ​​benefiting all together.From this point of view, the behavior of voting in the blue box can be explained by bearing the cost of producing public goods.Because if one person bears the cost of producing a public good, all share in the benefits. The question is, how do people distribute their votes into the boxes?From here we can see what attitude people hold towards public goods.If you are a selfish person, you will obviously put all 50 votes into the white box, and you will get 50,000 won. If others vote in the blue box, you can get a certain amount of money.Although these people welcome others to vote in the blue box, they don't think it is necessary for them to vote in the blue box. If everyone puts their votes into the white box, then each person can get 50,000 won. The experiment is over, and the group gets a total of 500,000 won.On the contrary, if everyone puts their tickets into the blue box, each person can get 250,000 won, and the group gets 2.5 million won.When all people take the initiative to bear the cost of producing public goods, the benefits each of them get will be fully increased to 5 times of the original. From the standpoint of the group as a whole, the best outcome is for everyone to put 50 tickets into the blue box.However, from a personal point of view, it is by no means the best situation.Because one vote in the blue box, the individual can get 500 won in benefits, and one vote in the white box, the individual can get 1,000 won in benefits.So, from a personal standpoint, throwing in a white box becomes the ideal situation. There can be no doubt as to what a selfish person would do in such a situation.You can clearly see that they have the attitude of putting all their votes in the white box and expecting others to put their votes in the blue box.This attitude of asking others to bear the cost of producing public goods is no different from the attitude of intending to free ride.The purpose of this experiment is to test the extent to which people tend to free-ride in real-world situations. However, the experimental results show that people's tendency to intend to free ride is unexpectedly weak.Change the conditions a little bit, and do a few more experiments, and it is almost impossible to see people putting all the votes into the white box.On average, people put 40% to 60% of their votes in the blue box.Even knowing that there was a free-rider opportunity, the subjects actively contributed almost 1/2 of the votes. Through the many experiments described above, we have repeatedly confirmed the fact that people do not always act selfishly.This means that human beings in the real world are completely different from the economic man mentioned in economics textbooks, and it also means that the ability of traditional economic theory to explain reality is still very limited.Therefore, economic policies based on traditional economic theory cannot achieve the expected results.Now, is it necessary to study economic theory and economic policy from a new perspective? Many wealthy people try their best to reduce the payment of inheritance tax, but there are also many wealthy people who willingly spend a large sum of money to help those in need.Even if they don't know the motive for taking out so much money, if they are just economic people who are keen on their own self-interest, it is impossible to do such a thing anyway.Such instances are not uncommon, since human society is not entirely made up of "selfish animals." America's wealthy are known for their philanthropy.Compared to other countries with a similar level of economic development, it can be seen that the size of the US contribution is very large.Some people also explain: "Compared with many European countries, the social security system in the United States is relatively weaker." Therefore, from a personal perspective, it is more necessary to provide help to those in need.When you think about it, this is a pretty reasonable explanation. However, what I see is that the unique tradition and culture of the United States played an important role in it. In American society, the philanthropy of the rich really started at the end of the 19th century when industrial capitalism was booming.American capitalists who have accumulated a lot of wealth followed the example of European aristocrats, building mansions one after another and decorating them with various luxuries.At the same time, they also recognize their social responsibilities and show great enthusiasm for charity activities. A typical example is the oil magnate Rockefeller.His donations are very active.Involving education, basic science, art, public health and other fields.In order to promote the education of black women, he donated a lot of money and provided great help to the establishment of Spellman College.Rockefeller's donation also played a decisive role in making the University of Chicago the most famous university in the world.He donated $80 million at the time, an astronomical sum that enabled a small new school to be reorganized into a comprehensive university. "Steel King" Carnegie is no less than Rockefeller in terms of charitable activities.With his donation, many public libraries have been established in the United States, Britain, Canada and other countries.In addition, he donated to establish Carnegie Mellon University.There is also active donor activity in the education sector.The diameter of the Hooke telescope is 2.5 meters. He also donated a huge amount of money when making this large telescope. Carnegie's footprints can also be seen at Princeton University, where I studied.There is the Carnegie artificial lake he donated to build on the campus. At that time, the school leaders hoped that he would donate to build a library.But he made an unexpected adjustment to it, stubbornly believing that the lake was necessary.Carnegie's name is stamped on every corner of American University to promote his philanthropic efforts. It's very interesting that people called "robber barons" to capitalists like Rockefeller or Carnegie at the time.This alias reveals their rather tough and ruthless way of accumulating wealth.But they are not particularly immoral people, it is just that the environment at that time is likely to produce such behavior.In the early days of capitalism, that banditry was everywhere. Regardless of the process of wealth accumulation, their passionate philanthropy has moved people.In American society, people like Rockefeller or Carnegie have always been the most revered objects.There is a saying in Korean, "Make money like a dog, use it like a prime minister".It can be said that they are typical representatives of spending money like a prime minister.They have turned "a high position comes with a heavy responsibility" into personal practice, and thanks to them, American capitalism has been able to develop healthily. The tradition of excellence they started is now carried on by the top two billionaires in the United States—Bill Gates and Warren Buffett.Judging from the scale of Bill Gates' donations, he definitely ranks first.So far, he has donated about $30 billion.The Bill & Melinda Gates Foundation founded by the Gates couple is regarded as a model of charitable behavior in the American social industry.The Bill & Melinda Gates Foundation's tireless commitment to education and public health has made life better for many around the world. Recently, Buffett said that he is willing to donate 85% of his entire fortune - 37 billion US dollars - and this news shocked the world.It is almost difficult to find a precedent for giving everything to benefit the society like this. What is more interesting is that the money is not stored in his own foundation, but in the Bill and Melinda Gates Foundation.It seems like the money would be put to better use in the Bill & Melinda Gates Foundation, which is a very generous thought. Gates and Buffett have drawn attention for being the first to oppose President Bush's plan to eliminate the estate tax.They believe that the abolition of inheritance tax will bring various adverse effects to society, and of course, it will also have adverse effects on children. This is a bit similar to the person who should be the most eager to abolish inheritance tax, but stands out against the abolition of inheritance tax at once. "Human beings are selfish animals", the facts do not always match up with this statement.