20% Isn't Worth It

There's a computer program in Europe that can understand legal systems, and it illustrates some interesting things. For example, economically rational predictions are often wrong when applied to the real world.

Game theory looks at how strategic interactions between rational people lead to outcomes reflecting real player preferences. In the Ultimatum game, for example, two players decide how a sum is to be divided. The proposer suggests what the split should be, the responder either can accept or reject this offer. But if the responder rejects the split, both players get nothing.

Researchers have found that often proposers offer 50:50, even though the responder might accept less. They also found that responders always reject splits where they get less than 20 percent. In economics, this would be considered irrational, because the responder loses too, but this illustrates that fairness is a very important element in strategic interactions. - ScienceDaily

This doesn't come as a surprise, but it is interesting to see it reflected in computer system designed to deal with intellectual property rights. Just something to think about when "trickle down" economics is discussed. The policies of the past decade have reduced the bottom 40% of America to less than 20% of the national income. Even a computer rejects that deal.

Something to think about.