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George Mason University economist/blogger Tyler Cowen calls our attention to a piece in the latest Economist magazine.

The article is about "ultimatum," a classic game-playing scenario, in which there is a pot of money and two players. The first player gets to divide the cash in two portions of any size, one for each player. The second player gets to accept the portions or reject them, but if he says "no," nobody gets any money and everybody loses. Classical economics says that the intelligent, "rational" answer for Player No. 2 is to agree to the split-up no matter how small his portion is. After all, it's more than he had to start with, which was zero. But of course human nature doesn't work this way. When psychology subjects play the game, the second player often deems his small portion "unfair," and he pulls the plug.

Now a Harvard professor has published research showing that, in his experiments, male players who rejected small shares and ended the game had much higher testosterone levels than those who didn't.

The Economist:

The responders who rejected a low final offer had an average testosterone level more than 50% higher than the average of those who accepted. Five of the seven men with the highest testosterone levels in the study rejected a $5 ultimate offer [out of $40] but only one of the 19 others made the same decision.

Tyler Cowen:

In other words, irrationality isn't just a deviation due to imperfection, we are programmed to be spiteful. Here is information on how high testosterone levels are correlated with urges to compete and be dominant.
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