Sunday, July 22, 2007

Testosterone economics

A discovery re rational economics' ultimatum game:

... one player divides a pot of money between himself and another. The other
then chooses whether to accept the offer. If he rejects it, neither player
benefits. And despite the instincts of classical economics, a stingy offer
(one that is less than about a quarter of the total) is, indeed, usually
rejected.

...the responders who rejected a low final offer had an average testosterone level more than 50% higher than the average of those who accepted.
However, as the article linked through points out, the choices are rational from an evolutionary, rather than a purely arithmetic, standpoint. Marketers have always been ahead of classical economists in understanding the biological imperatives behind irrational decisions, if not necessarily delineated Dawkins style.

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