Keeping up with the Jones
The article is primarily about some new field of economics called "neuroeconomics." It studies, among other things, the mind to better understand rational behavior or the lack thereof. The article touches on the "envy principle" that Euge and I were debating earlier this week. Check this out:
The 'ultimatum game' involves two subjects -- researchers generally recruit undergraduates, but if you're doing this at home, feel free to use your own kids. Subject A gets 10 dollar bills. He can choose to give any number of them to subject B, who can accept or reject the offer. If she accepts, they split the money as A proposed; if she rejects A's offer, both get nothing. As predicted by the theories of mathematician John Nash (subject of the movie 'A Beautiful Mind'), A makes the most money by offering one dollar to B, keeping nine for himself, and B should accept it, because one dollar is better than none.
But if you ignore the equations and focus on how people actually behave, you see something different, says Jonathan D. Cohen, director of the Center for the Study of Brain, Mind and Behavior at Princeton. People playing B who receive only one or two dollars overwhelmingly reject the offer. Economists have no better explanation than simple spite over feeling shortchanged.
posted by david burnstein at 9:34 AM
1 Comments:
I think I posted this while you were typing your comment. So no foul. There is a field of economics thats studies human behavior. I'm most familiar with its application in an experimental context. When I was in grad school my advisor, the honourable Dr. Wally Mullin, poo-poohed experimental economics, (as I recall) largely on the grounds that such experiments were myopic and failed to capture the true complexity of markets. On the other hand, it is a field of economics that seems to be where all the action is. The 2002 Nobel price winners in economics were a psychologist and an experimental economist.
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