People operate in cultural contexts

When folk try to apply the scientific method to the study of how folk behave, interact and respond – broadly, the social sciences, including psychology and economics, among diverse others – I notice a tendency to try to put the subjects into an isolated system so as to eliminate extraneous externalities. This is an understandable attempt to emulate what the physical sciences do in experiments; but it it subject to perilous complications because, in fact, human beings always deal with the experimental set-up in terms that interpolate – however unwittingly – some social context. The experimenter tries to so set things up as to remove the complications of social context – but it makes no sense to try to do that, because (almost all) human beings always do operate in some social context, even if the experimenter has done everything possible to remove them from their usual social contexts.

Take the ultimatum game: this has two participants, mutually anonymous, a sender and a receiver. The experimenter has given the sender (say) twenty valued tokens (e.g. units of money). The sender divides this into one pile for self and another to be sent to the receiver. The receiver, on being told how the sender has divided the whole, gets to chose whether to accept their pile, thereby allowing the sender to keep the other, or to reject the given offer, in which case the experimenter takes back all the tokens and neither party gets any.

The orthodox interpretation of this says that, since it's a one-off transaction and neither party has any idea who the other is, their rational response to such a situation should be for each to maximise the number of valued tokens received; the sender shall keep as many as allowed for self and give as few as permitted to receiver, who shall accept anything rather than nothing. In practice, participants don't do that – unless they've been indoctrinated by economists into believing that's the right way to behave. Receivers reject offers that strike them as unfair; and senders, anticipating this, typically strike a compromise between greed and fairness. This behaviour is characterised as irrational – and this says more about those who so characterise it than about the participants.

The orthodoxy is ignoring the fact that, quite apart from the situation they are setting up, the participants are exercising general responses that they have learned, as part of the cultures in which they grew up, that are important to how those cultures manage to function and stay healthy. Receivers aren't dependent on the income from participation to survive, so they can afford to give up the benefits of accepting an offer, if it happens to be unfair, in exchange for the subtler benefit that their culture has taught them – that of teaching the sender to behave in a manner more conducive to the general well-being of the society, at large, in which the receiver is living. Even if the receiver shall never have any further interaction with this particular sender, the act of bolstering their ambient society's ability to function well yields a net benefit to the receiver.

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