Freakonomics has tried to explain how people respond differently to incentives under different circumstances. In a series of experiments done, researchers have tried to understand how altruism and benevolence of an individual are driven by self interest.
Scenario 1: The Ultimatum Game: 10$ to be shared between two individuals where one person decides how much he wants to keep and the other decides whether both of them keep the money divided among them.
In this game, $10 is given to an individual and he has the option to share this person with person seated in another room. The receiver has the option to accept the money offered, in which case both the receiver and the giver keep the money with them. But in case the receiver refuses the money, then both the buyer and receiver get nothing. E.g. if the giver gives $5 to the receiver, and receiver is happy to keep the sum, then receiver and buyer both keep $5 each.
In the other case, if the receiver gives $0.20, in case the receiver refuses, both buyer and receiver get nothing.
It is seen that in this case, on an average, people tend to give close to $5 to the other individual.
Scenario 2: Dictator Game: The receiver has no word in the deal and division of $10 is left entirely to the discretion of one individual.
In this scenario it is seen that the givers usually shell out a lesser amount as compared to the previous deal. The general trend is that people still give out $ 1.5 in this case.
Scenario 3: Instead of sharing a maximum of 10$, the giver has option to take $ 1 from the other person: In this scenario, on an average a person gives $1.5 compared to an average of $3 in the previous scenario.
Scenario 4: Instead of sharing a maximum of $10, u has an option of taking back $10 from the other person:
It is seen that in this scenario, instead of giving, people have a tendency of “stealing” $1.5 on an average.
In the entire experiments, the people didn’t change but what changed is how people responded to different incentives. It is the situation where the disconnection between people and how the current decision does not impact any future decisions that led to people thinking more about themselves and less about the others thus proving against the standard economics of self interest of people. The new outcomes shows that human behavior is motivated by self interest in the real world and shows a new way to look at the behavior of same people when subjected to different circumstances.
So the next time when you think someone is “self -sacrificing” , try to look at him through the above four situations and you could understand the driving force behind the benevolent act!
