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It doesn't add up

When it comes to money, people are irrational. Evolution accounts for a lot of it.

January 13, 2008|Michael Shermer, Michael Shermer is the publisher of Skeptic magazine, a columnist for Scientific American and the author of "The Mind of the Market: Compassionate Apes, Competitive Humans, and Lessons from Evolutionary Economics."

How much should you offer? Why not suggest a $90-$10 split? If your game partner is a rational, self-interested money-maximizer -- the very embodiment of Homo economicus -- he isn't going to turn down a free 10 bucks, is he? He is. Research shows that proposals that offer much less than a $70-$30 split are usually rejected.

Why? Because they aren't fair. Says who? Says the moral emotion of "reciprocal altruism," which evolved over the Paleolithic eons to demand fairness on the part of our potential exchange partners. "I'll scratch your back if you'll scratch mine" only works if I know you will respond with something approaching parity. The moral sense of fairness is hard-wired into our brains and is an emotion shared by most people and primates tested for it, including people from non-Western cultures and those living close to how our Paleolithic ancestors lived.


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When it comes to money, as in most other aspects of life, reason and rationality are trumped by emotions and feelings.

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