Preview

The Ultimate Game Of Economics Analysis

Good Essays
Open Document
Open Document
1480 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
The Ultimate Game Of Economics Analysis
Have you heard about the ultimate game of economics? Here’s how it goes.

A person - let’s call him proposer - is given a hundred bucks and asked to split the money with a stranger, called responder. The split doesn’t have to be equal. Proposer could split it 50-50 or he could even keep 90 for himself and offer 10 to the stranger. But the condition is that if the responder rejects the offer, none of them get any money.

If you were the responder, at what split ratio would you accept the offer?

50-50? Most people would consider that fair. But is it rational?

What if you didn’t know about the total sum involved in the deal and you’re told only about the amount that proposer offers you? Isn’t it like a free money, something that you found lying
…show more content…
“How dare the proposer offer less than 50 to me?”

Some would consider it fair that the proposer should keep even less than 50 for himself and offer more to the responder. That way, even if the responder is little high on the irrationality, responder’s offer is more likely to get accepted.

The Ultimate Game of economics isn’t something that I have coined myself. Wikipedia mentions -

When carried out between members of a shared social group (e.g., a village, a tribe, a nation, humanity) people offer "fair" (i.e., 50:50) splits, and offers of less than 30% are often rejected.

The Law of Higher Good

But how exactly do we define what’s fair? Here’s another hypothetical situation. I have taken this example from Prof. Sanjay Bakshi’s post -

You are in charge of running a retail store and one of your cashiers, an elderly woman, is caught committing a minor embezzlement. Fearing that she might be dismissed, she approaches you to plead forgiveness. She tells you that this is the first time she embezzled money from the company and promises that she’ll never do it again. She tells you about her sad situation, namely that her husband is very ill and that she was going to use the money to buy medicines for him. She becomes extremely emotional and your heart is melting. What do you
…show more content…
Let’s talk about morality and investing.

Should you invest in a business that manufactures tobacco products or even alcohol for that matter? These products are harmful to the society so isn’t it unethical to promote these businesses? But scientists have proved that even sugar is very harmful too. Should you then reject the businesses that use sugar in their products? If yes, then you’ll have to filter out almost all the businesses selling packaged foods.

It’s a very difficult question. And the answer is very subjective. Call it the investing version of the trolley problem.

Coming back to the proposer-responder game, it’s not just the ultimate game of economics but the ultimate game of life. My intention in this discussion is to nudge you to think about these paradoxes of fairness and morality in the context of your own life and the decision that you’ve made or are going to make in future.

And while you do that let me go and find that scientist who would like to play the ultimate game of economics with me. It would be a good opportunity to make few easy

You May Also Find These Documents Helpful

  • Satisfactory Essays

    Chaiken Case Brief

    • 348 Words
    • 2 Pages

    ~ Gross returns were to be divided on a percentage basis between all three men.…

    • 348 Words
    • 2 Pages
    Satisfactory Essays
  • Powerful Essays

    M1 Unit 3 Business Plan

    • 4037 Words
    • 17 Pages

    receive more or less than 50% of the business unless agreed upon by both partners.…

    • 4037 Words
    • 17 Pages
    Powerful Essays
  • Good Essays

    John Rawls’ Fairness Approach is an appropriate ethical framework to use when assessing this dilemma. This approach questions if everyone involved is being treated fairly (is there favoritism and discrimination?). The Fairness Approach examines how fairly or unfairly the actions of an individual or group distribute benefits and burdens everyone else. With this approach, consistency of treatment among persons is key. The only insistence when treatment must differ is if there is a morally relevant difference between people (Andre, Meyer, Shanks, Velasquez, 1989). There are three different kinds of justice -- Distributive, Restorative, and Compensatory. Distributive justice focuses on the benefits and burdens evenly distributed amongst society’s…

    • 183 Words
    • 1 Page
    Good Essays
  • Satisfactory Essays

    Study Review Micro Ch. 1

    • 633 Words
    • 3 Pages

    * Due to scarce resources, every individual, whether rich or poor, is faced with an implicit cost when choosing to produce or consume more of one good over another.…

    • 633 Words
    • 3 Pages
    Satisfactory Essays
  • Good Essays

    Test 1 Question Bank

    • 8500 Words
    • 32 Pages

    6. Kristin offers to sell land to Ian for $5,000. Ian says that he will not pay$5,000 but he will pay $4,000. Kristin says no. Two days later, Ian changes his mind and delivers an acceptance to Kristin’s original offer. Which of the following best describes this situation?…

    • 8500 Words
    • 32 Pages
    Good Essays
  • Best Essays

    Human behavior is a complex subject and people make decisions everyday that will not only affect themselves, but other people around them. This essay will attempt to show whether people are rational in an economist’s sense, and reasonable in a lawyer’s sense. Whatever the outcome, there will be a discussion into if it matters, and how this behavior is useful for lawyers and economists in coming to decisions, and making predictions.…

    • 3562 Words
    • 15 Pages
    Best Essays
  • Better Essays

    Law122 Final

    • 46388 Words
    • 186 Pages

    Fairness/justice: we should make sure that good and bad consequences are distributed fairly; we should pay our debts, treat like cases alike…

    • 46388 Words
    • 186 Pages
    Better Essays
  • Powerful Essays

    O 'Sullivan, A. and Sheffrin, S. M. (2003). Economics: Principles in action. Pearson Prentice Hall, Upper Saddle River, New Jersey.…

    • 1489 Words
    • 6 Pages
    Powerful Essays
  • Good Essays

    The outcome has been buying fifty-fifty in the short term. In fact, we agreed to share the limited resources on the short term, and then find another agreement 5 years after because each 5 years there are lots of changes thanks to progress of researches etc. we decided during the auction to offer 2 millions as our first offer, and to make our maximum as 4 millions. I thought that it was a good deal because we could each save lots of lives and keep a good reputation. However, Dr Sanchez and I said me how much we were able to spend, and at this moment I should have realise that I had much more power than Dr Sanchez and that maybe I would be able to buy a little more prunes than him in order to have an advantage. This outcome is finally not as satisfactory as it could be because I knew that I had much more money to spend and I could be able to be much more effective. However, in this situation that was an integrative negotiation situation, the best thing could be to cooperate in order to both win at the end. So the outcome is satisfactory even if it could be better for me if I decided to compete and take all the prunes but that was not fair in my opinion because we were defending the same cause.…

    • 1043 Words
    • 5 Pages
    Good Essays
  • Better Essays

    Negotiation - Moms.Com

    • 1055 Words
    • 5 Pages

    After realizing the most important areas for each of us, we basically traded these items by giving out the maximum we could on them. So, I gave her the earliest payment option and she gave me the maximum run numbers. This helped us expand the pie.…

    • 1055 Words
    • 5 Pages
    Better Essays
  • Powerful Essays

    1. Introduction It has long been accepted that an equal division of resources in a strict sense is implausible. Several alternative egalitarianism theories have since arisen, with one being luck egalitarianism. Luck egalitarianism deals with the question of when inequalities can be justified, and when they cannot, by appealing to agent responsibility. If inequality is a result of the agent’s choice, then it is justified.…

    • 3816 Words
    • 16 Pages
    Powerful Essays
  • Best Essays

    Csr at Tfl

    • 2434 Words
    • 10 Pages

    Research the drivers that are pushing organisations to take an increasing interest in corporate social responsibility (CSR) and business ethics. Give examples from your own and other organisations of the organisational responses to these drivers and make recommendations to move the organisation, or your part of it forward in relation to these two topics.…

    • 2434 Words
    • 10 Pages
    Best Essays
  • Good Essays

    Ethicsgame

    • 821 Words
    • 4 Pages

    Because you value equality and rationality, you tend to assume that the universal application of a fair system is the best way to achieve an ethical result.…

    • 821 Words
    • 4 Pages
    Good Essays
  • Satisfactory Essays

    Bob: Hey Mike, this is Bob. Hey, I know you were going to write me a check for $25,000, but could you write two checks instead? (Pause) One for Al for $22,000 and one for me for $3,000.…

    • 257 Words
    • 1 Page
    Satisfactory Essays
  • Good Essays

    Economics has been defined as 'I'll scratch your back if you scratch mine.' To my learned ear that sounds like two people with itchy backs.…

    • 400 Words
    • 2 Pages
    Good Essays