Men with high testosterone more likely to reject gifts in ultimatum game (comments by both Jake and Kara)

One of the ways that scientists study human decision making is through the study of behavior in simple games -- loosely lumped into a field called game theory.

Some of the most interesting and revealing findings involving such games is that human beings are not "strictly rational." Before everyone jumps all over me, let me define that statement. Strictly rational in this sense means that the behavior of human beings during these games does not always maximize expected value of the numerical (usually monetary) reward over the long-term. In laymans terms, if you offer someone $5 with no strings and they tell you to go to hell, then they have not accepted the rational maximum of reward.

However, this "irrational" behavior can be from a variety of reasons that we could also describe as themselves rational. Say the person doesn't like me very much and thinks I am trying to con them. Say they think I will ask them for something in return later that they are not prepared to give. Thus, in game theory when we see someone acting irrationally, we infer that there is some other process by which value is being calculated. We assume a hidden rationale and try and determine what that rationale is.

A compelling example of this is a recent paper published in the Proceedings of the Royal Society by Terence Burnham.

In the paper, Burnham organized an ultimatum game. In the ultimatum game, I offer someone either a low reward or a high reward -- in this case either $25 or $5 -- out of a total amount of which I keep the remainder -- in this case the total is $40. One player gets to choose how much to offer the other person each round, and the other person chooses whether they are willing to accept that amount. If the other player refuses to accept it, both players get nothing. If the player accepts it, the money is divided according to the proposed split.

There are two important things to think about in this game. The first is that a "rational" person would be willing to accept any amount of money offered regardless of whether it is the higher or the lower amount. The second is that if the game is repeated between the players -- alternating the one who offers and the one who receives the money -- the players' behavior tends to adopt the steady state of giving $25. This is because both players realize that if they stiff the other guy, the other guy is going to stiff them right back and no one is going to make as much money. If a player develops a reputation for not playing fairly -- playing so that on average both players get $20 per hand -- the other player is willing to reject the offer of the lower amount to punish them. This trait is called altruistic punishment, since the individual doing the punishing gains nothing from giving out punishment and might even feel a cost. Thus, repeat interactions in the ultimatum game encourage reciprocity.

What about single trials of the game though, when the players know they will never interact with one another again?

In a single trial ultimatum game, the person making the offer has no real incentive to not offer just $5 unless he believes the other guy will reject the offer and make them both get nothing. The other player will never get a chance to punish him back, so his only recourse to punish the player making the low offer is to reject it.

Dr. Burnham tested this on several men in his paper, and he found something interesting: Men with higher levels of testosterone were more likely to reject a low offer. Here is the data:

i-5360b96c1e2134b459842329e06ccc07-ultimatum.jpg

How do we interpret these experiments? There are a variety of ways.

Burnham notes:

[T]he first ultimatum game experiment reported that low offers were frequently rejected. This deviation between behaviour and that predicted by standard theory has been replicated in myriad studies, including games played for large stakes and cross-culturally.

There is no broadly accepted explanation for these rejections, which contradict the standard definition of rationality. One prominent suggestion is that people have a taste for 'fairness', and thus ultimatum game rejections make people not only poorer, but also happier. If fairness is the proximate cause of ultimatum game rejections, it raises the question of the origin of this preferences. One suggestion is that people act 'as if' there is some chance that accepting low offers will damage their reputation and cost them in future interactions. If it is possible that behaviour will be repeated (or simply observed), then the rejection of small offers may be rational. This reputation-management machinery may be used by experimental subjects even in anonymous settings with no opportunity to develop reputations. (Emphasis mine. Citations removed.)

Basically, he is saying that even though there is no planned repeat interactions, the desire for a reputation of fairness -- shown by altruistically punishing cheaters -- is stronger in men with high testosterone levels.

The Economist (where I found this article) says something different:

What Dr Burnham's result supports is a much deeper rejection of the tenets of classical economics than one based on a slight mis-evolution of negotiating skills. It backs the idea that what people really strive for is relative rather than absolute prosperity. They would rather accept less themselves than see a rival get ahead. That is likely to be particularly true in individuals with high testosterone levels, since that hormone is correlated with social dominance in many species.

Economists often refer to this sort of behaviour as irrational. In fact, it is not. It is simply, as it were, differently rational. The things that money can buy are merely means to an end -- social status -- that brings desirable reproductive opportunities. If another route brings that status more directly, money is irrelevant.

They seem to be emphasizing that someone who rejects an offer is expressing social dominance rather than a reputation for fairness.

This would correlate better with the idea of being testosterone mediated, but we need to be careful when we make claims about the behavioral effects of hormones. One of my advisors in college, Robert Sapolsky, wrote a book on among other things the relation between testosterone and behavior. One of the observations he made is that for levels of testosterone within the normal range, aggression in males is not affected. It is only outside the normal range that manifest in aggressive tendencies.

So what are the normal values for saliva testosterone?

Here is another chart of them, also by Burnham et al.

i-449438ae2d2713820c7d1f4dced2b030-t-saliva.jpg

(As a side note, this was taken from a paper that showed that married men have lower circulating and particularly married men with children have lower circulating testosterone.)

All the male subjects for this study were graduates students at Harvard, but their marriage status was not indicated. I guess we can reasonable ball-park what normal should be for them as about 350 pmol/L. That would make the "high testosterone" group more or less in the normal range and the "low testosterone" group lower than average but within normal for married men with children. This subject is not discussed in paper as best as I can tell.

Unfortunately I think it brings up an issue of causality. What if all the men in the low group were married with children? We know that married men are on average less aggressive. (I don't know whether children change that, but I will look it up.) Perhaps the confound here is that the married men were less likely to reject an offer even if that they consider it unfair. (One has does have all those mouth to feed.)

Basically, I think this article is interesting, but I am reluctant to make any broad claims based on it. This is largely because -- as argued in the book I pointed out earlier -- testosterone has been put forward wrongly as a causal factor for a variety of behaviors. Burnham may be right, but I would like to see some other evidence first.

Kara's two and a half cents:

(The extra half a cent is a plug for Sapolsky's book. If you haven't read it, do. You will never again read an article about hormones in the same way.)

I think Jake's observation of the marriage-testosterone level correspondence is really interesting, and worth examining as a possible confound to Burnham's experiment. Since he's already touched on the major points of the paper, and since he's much more qualified to talk about endocrinology than I am, I'll restrict myself to commenting on the economic theory behind all this hoo-ha, at the risk of sounding like a broken record.

I was scandalized by the opening paragraph of the Economist article, which (not uncommonly in journalism about economics but shamefully for the publication in question) falls into the trap of taking a technical assumption at face value. It's doubly a shame since I think the ultimatum game is a great example of how economic theory has helped push our understanding of reward and the brain.

The ultimatum game is famous precisely because real people don't act the way they are "supposed to" according to the rules of the game. Humans' instinctive response is completely counter-intuitive when you think about it. Why turn down free money? (Although, given the experiment was done on grad students, if the game had been done with free food instead I speculate that there may have been different results.) Economists proposed an idealized behavioral outcome. Experimental evidence showed that the real-world outcome was very different, and now people are looking into why that is (social justice instincts, endocrinology, dominance behavior, etc.) and we're learning more about human motivation, incentives and behavior. I don't need to tell anyone here that science progresses by proposing new ideas, testing them, drawing inferences, and going back to the drawing board. In the immortal words of Vidal Sassoon, "lather, rinse, repeat".

One more point since I hope to write more about it in the future: traditional utility theory is inadequate, but we know this. As a result economists now have several utility functions that depend not only on absolute welfare but also on welfare relative to a reference group, in deference to the finding that keeping up with the Joneses is a real psychological concern. And yet more that account for the hedonic treadmill effect of always wanting to have more than you've had before. Economic researchers will be developing many other theories of human behavior for experimenters to test out, and the great shower of science will never run out of hot water. Kinda gives new meaning to the old excuse, "Sorry, can't go out tonight. I'm washing my hair."

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What a thought-provoking post. I really appreciate this careful and thorough analysis and presentation and thanks for the tip to the book. I sometimes get requests for something like that from folks in women's studies...will look into it.

I have studied game theory recently, I think there is too much emphasis being placed upon game theory by economists and other experts. The original founder of game theory John Nash has even said that his original idea was not correct, in that humans are not totally rational beings. The Rand Corporation who originally used game theory in their work tested game theory on their secretaries, who all cooperated rather than acted in a selfish way. Game theory considers that humans are totally rational, selfish and calculating, however, in reality people are just as likely to use their irrational emotions in decisions, to be cooperative and be fair minded. On the question of genes, new studies show that cells tend to select and change the genes in response to environmental factors rather than the genes dictating the outcomes. Game theory gives an incorrect view of a human being, and denies the idea that a human has emotions.

By Mabon Dane (not verified) on 28 Jul 2007 #permalink