Bellerbys Economics - Mr Stephenson

Tuesday, October 02, 2007

Born To Shop

This is the 100th entry on this blog - and what better way to celebrate it than with a game.

It's an Economics game called the Ultimatum Game - it's a part of Game Theory (Module 5). This is how it works. One player is given £100. He is told that he must share some of that money with a second player. However, if the second player rejects the deal, no one gets anything.

Now logic tells us that if player 1 offers player 2 even as little as £5, he should accept it - because after all, he's getting something for nothing.

However, people are not rational agents (goodbye, most of economic theory). Actual research shows that if player 2 feels that the deal is unfair, he will usually reject the deal as a way of punishing player 1 for treating him badly. This has confused Economics professors for some time.

Enter MIT researcher Dave Cesarini who has been working with twins in Sweden. He first of all discovered that identical twins responded more often in the same way to the same offer in the game than fraternal (non-identical) twins. This led him to suspect that genetics had something to do with the way we make economic choices.

His research has expanded with the help of other Swedish researchers to the point where it now appears clear that genetics does have a larger influence than logic on the way we bargain, choose and trade in Economics.

So, you see, it's not your fault if you spend all your parents' money in H&M, Zara and Top Shop - you were simply born to shop.

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