Sunday, February 14, 2010

Is fairness a social construct?

Economists have used the ultimatum game to discuss fairness. In this game one player splits a sum of money and the other player either accepts or rejects the split. If the second party rejects the split, neither party gets anything. Many people in the role of the second player will reject splits that they consider unfair to punish the first player even though they suffer a loss as a result.

Joseph Henrich in "Does Culture Matter in Economic Behavior? Ultimatum Game Bargaining Among the Machiguenga of the Peruvian Amazon" (American Economic Review, Sept 2000 pp 973-979; pdf here) found that a pre-industrial group in the Amazon basin did not play the game in the same way most groups in the U.S. play the game.
Machiguenga proposers seem to possess little or no sense of obligation to provide an equal share to responders, and responders had little or no expectation of receiving an equal share nor any desire to punish unequal divisions. The modal offer of 15 percent seemed quite “fair” to most Machiguenga.
This evidence generates at least three important questions: (1) Where do people get their rules, expectations, or notions of fairness from? (2) Why do these rules, expectations, and notions seem to vary among groups of people? and (3) How much can these varying rules, expectations, and notions affect real economic behavior? (p 978)
This result raises the question of whether fairness is socially constructed. If it is, why should we pay attention to it?

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