Thursday, October 11, 2007

The Rational Animal

Aristotle defined man as a rational animal. New scientific research adds the qualifier, "but not all the time." In fact, chimpanzees appear to be more consistent rational maximizers than humans.

While it is true that people generally behave in rational ways, there are many well-documented occasions when people consistently behave in ways that defy reason. The systematic study of such behavior is known as "behavioral finance" or "behavioral economics."

One of the best-known tests in behavioral finance is the ultimatum game. In this test, two individuals must agree on how to divide a reward. No agreement, no reward.

Researchers at the Max Planck Institute report that when chimpanzees play the ultimatum game, the chimps behave the way traditional economic theory predicts that a rational economic agent should. Chimps will accept whatever they are given, and are thereby rationally better off. Humans, on the other hand, will reject any deal that strays too far from a 50-50 division of the reward, thereby sacrificing a rational improvement in their condition in favor of some other value.

The difference between the two species appears to be a sense of fair play. Chimps don't care about it. People do. Apparently, for humans, fair play trumps reason.

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