An Embarrassment of Riches: Modeling Social Preferences in Ultimatum Games

Traditional economic models presume that individuals do not take an interest in the interests of those with whom they interact. More particularly, the assumption of non-tuism implies that the utility function of each individual, as a measure of her preferences, is strictly independent of the utility functions of those with whom she interacts. Philip Wicksteed introduced the concept of non-tuism, stressing that an economic relationship is one entered into by two parties each of whom is intent on the furtherance of his own (not necessarily selfish) purposes, not those of the other. Interestingly, this idea is quite different from the usual egoistic assumption: a non-tuist may be a caring, altruistic human being, but when involved in an economic exchange, she must necessarily regard her own interest as paramount. Thus non-tuism is important insofar as it defines the scope of economic activities. When tuism to some degree motivates one’s conduct, then it ceases to be wholly economic. There is nothing wrong in saying that exchange activities display the above kind of motivation, but it is certainly farfetched to assume that all activities we may model within a rational choice framework share the same, non-tuistic motivation. In fact, it is plainly untrue. Note that we are distinguishing here between nontuism and selfishness, the latter being a more encompassing disposition that is not particularly tied with specific activities. That is, a selfish person will display a ‘me first’ attitude in all sorts of environments, caring just about her material wellbeing to the exclusion of other motives, whereas non-tuism is appropriate in all those cases in which we are expected to ‘win’ (as in competitive games or market interactions). Non-tuism, however, may not be appropriate at all in personal exchanges, and even in traditional economic areas such as labor economics [Fehr