The Discrimination Tax (Scientific American, 2013)
“It is your moment of decision. Your business partner has the only passcode that can access the pile of money you have made together. The scoundrel has offered you 30% instead of the half that is rightfully yours. But you have the ability to delete the account, along with every penny in it, permanently. If you refuse his offer and delete the account, neither of you will see a cent. Of course you are furious, but how much are you willing to lose just to spite him?
This scenario is an ultimatum game, an experimental game used to study how people resolve dilemmas that pit fairness against profit. The economically rational thing to do is to accept any offer greater than zero, simply because some money is better than no money. But people don’t respond that way. Offers lower than 25% are often rejected, suggesting that most people are willing to sacrifice to punish unfair treatment. Although it violates economic axioms, most ordinary people are not surprised by this result. We will pay to enforce respect….” -Keith Payne