Neuroeconomics / The Ultimatum Game

The ultimatum game is one in which one player has control of a sum of money, divides it up, and offers a share to another player. The share offered can be any size, so I could take 99 pennies out of the dollar and offer you one. If you reject the offer, we both get nothing. If you accept the offer, you get the penny and I get the 99 cents.

This game is the reason, or so a recent article in The Economist says, "psychologists know that economists are wrong." Economic principles, we're told, prescribe the acceptance of any offer that results in a financial gain, however small. Hey, it's free money, right? But in reality, there are those who will protest "a stingy offer" -- that's not fair! -- and refuse the offer on principle.

Interestingly enough, the refusers tend to have higher levels of the hormone testosterone. The title of the Economist article is "Men with a lot of testosterone make curious economic choices", something it's likely we all suspected to be so. Read the whole article here:
http://www.economist.com/science/displayStory.cfm?story_id=9433782&fsrc=nwlgafree

The article describes a study by a Dr. Terence Burnham, published in the Proceedings of the Royal Society, in which the ultimatum game was played and testosterone levels were measured:

... 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 but only one of the 19 others made the same decision.

What Dr Burnham's result supports is a much deeper rejection of the tenets of classical economics than one based on a slight mis-evolution of negotiating skills. It backs the idea that what people really strivefor is relative rather than absolute prosperity. They would rather accept less themselves than see a rival get ahead. That is likely to be particularly true in individuals with high testosterone levels, sincethat hormone is correlated with social dominance in many species.

Economists often refer to this sort of behaviour as irrational. In fact, it is not. It is simply, as it were, differently rational. The things that money can buy are merely means to an end--social status--that brings desirable reproductive opportunities. If another route brings that status more directly, money is irrelevant.

There's a lot here. If this is what we do when the offer is one of free money just for saying yes, think of what we do when society itself -- the very context in which our social standing is so important -- is in the balance.

Are there other cases in which people (hormones or no) reject solutions that would benefit them? Why? If you can think of one example, that's plenty for now.