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It's interesting how it's almost like people are subconsciously applying the golden mean to their incentives, on average they're slightly biased towards themselves from the middle of their option range.

My gut feeling is the power of social pressure to be a model citizen and to be fair is so strong that it affects most people's judgement even in detached lab experiments where the invigilator may not even be aware of their actions. Perhaps then the detachment of these experiments and the anonymity are enough to merely sway you towards self interest but not completely overturn the conditioning you've been exposed to your whole life.

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These guys get on my nerves because they are always like "well, of course its simplistic, and it in a lab, and therefore the premise is a bit iffy, and its hypothetical, but... it is still interesting, therefore we can make you think we've unearthed some holistic truth about human nature." They should rename from freakonmics to oversimplificationomics (which isn't too far off from the truth about what actual economists do).

I read this book because I was supposed to do a book report for extra credit in my econ course.

Never did the report, but the book it's heavily intriguing.
[One of the chapters asks "what do hookers and department store santas have in common".]

RSA videos are a wonderful means to learn new things t'boot. = D

I've got to agree with Peroxide, this was interesting while I was listening, but the more I think about it the more I suspect the experiments were mostly rubbish. One big problem with these kinds of experiments is that they always deal with trivial amounts of money. This almost completely eliminates economic motivations, and just leaves emotional ones.

Here's an example from the ultimatum game. We're told that when person b is offered an insulting split, like $9 and $1, they will almost certainly reject it. This is because the satisfaction of spiting the dick that wanted to give you only $1 is easily worth $1. But imagine if instead the game were played for $10,000 and they were offered a $9,000 to $1,000 split. I think you'd see virtually everyone willing to swallow their pride for that amount, especially with the anonymous setup of the experiment.

The dictator game suffers from the same problem. But also, if I were a subject I'd believe that there is very little chance person b even exists. Why would they if their only part in the experiment is to collect a set amount of money and be sent on their way? This becomes all the more obvious when the experiment is altered to suggest you can 'steal' up to $10 from this other subject.

The economic decisions that we make with large sums of money are not at all the same as the ones we make with piddling sums. Also, we're not idiots.

Oooooh yeah, since I think the perspective they present is a good one to have at hand..

The theme of the book is about how incentives we create or are placed under have unintended consequences on behavior.

Also, that the solution to the unforeseen problem that your incentives inevitably create is usually something unexpected.

For example..
In the rural parts of India, they still practice the tradition of bride burning and female infanticide.

The government attempted to amend this brutal behavior by starting a "Don't horribly abuse women" campaign with pamphlets and everything.
Sadly, this did nothing to decrease the occurrence of such abuse.

Coincidentally, when an outside organization introduced color television to a few rural villages.. the occurrence of abuse against women dropped dramatically.

So if you want terrible atrocities in far parts of the globe to stop, you should try both empowering people them with soap operas and sedating them with cricket matches apparently.

@Peroxide & @entr0py

What's illustrated here is only one chapter of the book so I understand why you're both focused on the experiments [which they use as anecdotal evidence really].

However, the theme of the book is: How Incentives Affect Behavior.
So think about the video from that mindset. [Hence my explanation above]
~~~

The point of the experiments are to identify what drives behavior & what is the average behavior that will be produced when an incentive is presented.

So to @Peroxide, of course it's simplified because scaling the experiment to actually micro or macroeconomic size would be difficult and full of uncontrolled variables.

But the experiments still show that: Incentives Affect Behavior In Ways You Wouldn't Expect.
[This is important if your business or institution is seeking to promote a particular behavior.]

@entr0py, again the dollar amount isn't important because it's a game.

If you changed rules to a hypothetical..
[like "we don't have this much money to give you but if we did, we would"]

and then gave them a choice of $90,000/ $10,000 split, the behavior would be the same.
~~~

So just remember: Most Incentives Have Counter-intuitive or Unexpected Consequences. =P