Clay Shirky proposes a lot of interesting concepts through his book “Here Comes Everybody.” The latest one to pique my interest is the ultimatum game.

The ultimatum game establishes a scenario where two individuals are given with an option. The first is given the sum of $10 to be separated in any fashion between the two. The second has the choice of accepting the first’s offer or rejecting the offer where neither would gain anything. The simple math is that the first person would maximize his or her gain by offering $9.99 to him or herself, while giving $.01 to the second person. The second person should be happy with anything since anything is better than nothing and accept the offer. That isn’t what happens. People don’t like getting the short end of the stick, even if it is better than having no stick. Fairness is a simple concept. Children go around claiming the fairness of things, and getting 1 cent of 10 dollars isn’t fair. So the second person rejects this offer. The experiment presented by Shirky goes on to state that people are willing to take some degree of unfairness if the gain is better than the rejection without being too insulting. The experiment he referred to stated that people were more willing to accept offers around $7 to $3. 70%-30% split is enough to satisfy the unfairness if a person has nothing invested. Good to know.

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