In a great book “SWAY”, the authors, Ori Brafman and Rom Brafman write on cultural attitudes to fairness and reciprocity.
“Lips puckered, Henri looked like he had just swallowed a spoonful of spoiled creme brulee. He kept blinking, as if he could wish away the foul taste in his mouth. In the background, the music grew increasingly ominous.
The day had started out on an unusually hopeful note for Henri. Against the odds, he was selected from among thousands of hopefuls to be a participant in Qui veut gagner des millions, the French version of the game show Who Wants to Be a Millionaire. As Henri sat down in the tall chair onstage, the lights dimmed and host Jean-Pierre Foucault introduced the contestant and his girlfriend, Sophie, who was cheering him on from the audience.
Regardless of the country it's shot in, Who Wants to Be a Millionaire follows the same rules: contestants answer multiple-choice questions that grow progressively more difficult as the amount of money at stake increases. The first few questions are always gimmes, such as
Which family member did Red Riding Hood go and visit?
A. Her mother
B. Her sister
C. Her grandmother
D. Her second cousin, twice removed
They progress to more obscure trivia, such as "How many sailors accompanied Columbus on his voyage from Spain to the New World?" If contestants run into trouble, they can use one of three lifelines: call a friend for help, narrow down the answer choices, or poll the audience.
Henri had done well on the first few questions, but everything changed when the host asked him, "Qu'est-ce qui gravite autour de la terre?"-that is, "What revolves around the earth?"
Henri looked down in concentration as the answer choices were read aloud: (A) The moon, (B) The sun, (C) Mars, and (D) Venus. Henri reread the question out loud and mulled the choices over in his head. As the ominous music continued to play, he bit his lip. Seeing the contestant's puzzlement turn into genuine consternation, the host offered some advice: "Take your time, and if you have any doubts, use a lifeline."
Needing all the help he could get, Henri decided to invoke his "ask the audience" lifeline. You'd think that Henri was smart to poll the audience. After all, even if some people get the answer wrong, in the aggregate the audience is usually right. But Henri was about to learn the hard way that our irrational perceptions of what's fair can dramatically sway our decision making.
"OK, audience, please use your answer pads," instructed the host. "Please answer this question for Henri. . . What revolves around the earth? If you know, please answer, and if you don't know, please abstain. (A) The moon, (B) The sun, (C) Mars, (D) Venus. You must vote now. Thank you!"
As the audience voted, the camera focused on Henri's girlfriend, dressed in a green sweater and fashionable red eyeglasses, looking utterly bewildered as to why her boyfriend couldn't come up with the right answer by himself. Then the camera panned across the French audience, capturing the dismay on their faces-a sign that they had made a diagnostic decision about Henri.
To say that Henri was no Galileo would be an understatement. Whether because he had slept through his elementary school science classes or because he was overcome with nervousness under the spotlight. Henri was stumped.
When the audience's answers were revealed, Henri took a deep breath, and swallowed hard: so much was on the line-he had to get this question right to stay in the game. As you might expect, no one in the audience voted for the answer that Venus revolved around the earth. For whatever reason, though, 2 percent voted for Mars. And then came the strange part. "If you allow me," said the host, "it is perhaps my own opinion, but the result is quite divided." Only 42 percent of the audience voted for the right answer, the moon. A full 56 percent voted for the sun revolving around the earth.
Henri was dumbfounded, and at this point we might ask whether something is horribly wrong with the French educational system. But it wasn't ignorance that the audience was exhibiting.
As we delve into what happened in France, we'll uncover our next psychological undercurrent-one that affects interactions from the boardroom to the jailhouse to the playground. It begins with a German experiment that anyone who had to share things as a kid can relate to. Researchers in Berlin placed a random pair of strangers in separate rooms. Each participant was told that he or she had been paired with a partner, whose identity would not be revealed. The pair would be given a combined sum of $10-but it was up to them to decide how to split it. The catch, though, was that the participants couldn't talk to each other, flip a coin, or enter into negotiation. Instead, one person was randomly chosen to decide how to split the money.
The splitting participant could divvy up the money any way he or she wanted. The receiving partner was then presented with the offer and had to decide whether to accept it or not. If the receiving partner accepted, both participants would collect their shares. If he or she rejected the offer, both parties would leave empty-handed.
This game would be played only once, so the participants would be given no second chance. Furthermore, the participants were told that after the round was over, they would remain anonymous, going their separate ways.
Let's put ourselves for a moment in the shoes of the person deciding how to divvy up the sum. Most of us would probably opt to share the pot equally. Indeed, when it was time to make their choices, the majority of participants did decide to divide the sum right down the middle, so that each person would get $5. And all of the receiving partners who were presented with this offer accepted it.
The interesting part is what happened when the people deciding on the split gave themselves more than half. As you can imagine, their partners felt indignant. But were they indignant enough to walk away from the money? The answer, a vast majority of the time, was a resounding yes. Rather than accept the money that had been offered, most participants who were presented with an unfair split rejected it, opting instead to walk away empty-handed.
Now, from a purely rational perspective, it would have made sense for the receiving partners to accept any offer. After all, some money is better than no money. Two dollars, while not as good as five, is still better than zero. Regardless of the logic of such arguments, though, the overwhelming majority of partners who were presented with an unfair deal rejected the offer. They went home empty-handed but with the feeling that justice had been served.
What's more, their willingness to walk away from the deal when the split was uneven wasn't affected by the amount of money that was offered. When the same experiment was repeated with $100 instead of $10, participants were no more likely to accept an inequitable split.
What the study demonstrates is our deep-rooted belief in fairness and the great lengths to which we'll go to defend it. It was this adherence to the rules of fairness that swayed the French Who Wants to Be a Millionaire audience. Did Henri, who didn't know basic astronomy, really deserve a million euros? To the French audience, the answer-by a 56 percent to 42 percent vote-was a resounding no. They deliberately chose the wrong answer because it didn't seem fair to them for Henri to progress in the game with their help when he couldn't even answer such an easy question.
When Henri followed the audience's wrong answer, you could hear the spectators' muffled laughter. To them, giving the undeserving contestant the right answer would have been like allowing the uneven splitter to walk away with a disproportionate amount of money; it just wouldn't be fair.
But what if Henri had been someone the audience members expected less of-a first grader, for example? Would they have been as harsh? A variation of the "splitter" experiment sheds interesting light on this distinction. Participants in this study were presented with the same rules, except that instead of pairing up with another person, they were told they would be partnered with a computer, and that the computer would choose how to split the money. When the computer made "unfair" offers, the partners didn't balk. They were willing to accept an uneven split in the computer's favor, even though they would have rejected the same offer coming from a real person.
In other words, when it comes to fairness, it's the process, not the outcome, that causes us to react irrationally. This is called procedural justice. We don't expect a computer to be fair-but we do expect people to be.
Consider what would happen if we participated in a similar experiment where the person making the split was allowed to communicate with us. Imagine if he told us he was having financial difficulties and could really use the extra cash. We'd probably be willing to settle for less than half. Having been given a good reason for the inequitable split, we'd be less likely to feel that we were being taken advantage of and would be more likely to accept the offer.
But even the most calculating professionals are swayed by fairness. When you think of car dealers, you certainly wouldn't associate them with the notion of fairness. But despite their reputation for oily salesmanship and bilking consumers, in fact they're often the ones being taken to the cleaners-by auto manufacturers. Most car dealerships are relatively small operations and have little pricing power compared to the auto manufacturers. If you're a Ford dealer, for example, then Ford Motor Company is your only supplier; they control pricing and can dictate what your inventory will be. The dealers regularly pay high prices and get stuck with poor inventory-models that are difficult to sell but that the manufacturer needs to move.
When researchers talked to car dealers, they discovered that the dealers evaluated their relationships with manufacturers in a surprisingly irrational way. A nationwide survey of car dealers revealed that rather than focusing solely on the results of their transactions with the manufacturers (Did I overpay? Did I receive high-quality inventory?), the dealers cared more about how the manufacturers behaved toward them. According to the research, what mattered to the dealers wasn't just whether they felt they got a good deal; they evaluated transactions by such seemingly insignificant details as whether the manufacturers "[took] pains to learn the local conditions under which dealers operate," acted in a "polite and well-mannered" fashion, and "treat[ed] dealers with respect." These fairness factors proved more important than the underlying economic numbers to the dealers' overall level of satisfaction with the outcome.
The researchers concluded that auto manufacturers and business managers alike "place too great an importance on margins and outcomes" when what was clearly more important to the customer was the perceived fairness of the process. They recommended that all managers-regardless of industry-put greater" effort, energy, investment, and patience" into nurturing the relationship. As the car dealer study suggests, how we are treated-the fairness of the procedure-has as much to do with our satisfaction as the ultimate outcome.
What is especially interesting about the issue of fairness is how important it is for people to feel they have a voice. A group of researchers asked hundreds of felons from Baltimore, Detroit, and Phoenix to fill out a survey. These men had been convicted of crimes ranging from drug possession to fraud to armed robbery. The first part of the survey consisted of factual questions, such as the nature of their conviction and the length of their prison sentence. In part two, the survey moved on to questions about perceptions of fairness: How were you treated? How did you like the judge? Were the lawyers nice to you?
All of the survey questions fell into one of two categories: focusing either on the specific outcome-in this case a fine, probation, or prison time-or on how fair the process seemed-how the respondents perceived their journey through the legal system.
When researchers tabulated and analyzed the results, they found a peculiar pattern. As we'd expect, in evaluating the fairness of their trial, respondents placed a lot of weight on the outcome. Someone who got off with a light sentence naturally thought the trial was more fair than a guy who got the maximum sentence.
But it turns out that regardless of the crime they committed or the punishment they received, respondents placed nearly as much weight on the process as they did on the outcome.
One of the factors weighed most heavily by respondents was how much time their lawyer spent with them. The more time he or she spent with them, the more satisfied the respondents were with the ultimate outcome. Now, you'd think that the results would have been the opposite: a convicted felon who got stuck with a long sentence, especially after spending time with his attorney, would be angry. But it turns out that the behavior of his lawyer made a huge difference. In other words, although the outcome might be exactly the same, when we don't get to voice our concerns, we perceive the overall fairness of the experience quite differently.
The need to be heard, it turns out, isn't limited to just convicted felons. As you walk up Sand Hill Road in Menlo Park, California, with its modest-looking two-story office buildings, you don't notice anything particularly glitzy about the place. But on closer inspection, and after a couple of Ferraris go speeding by, you realize the affluence of the area. In these offices some of the nation's biggest high-tech companies had their start.
Sitting in their plush offices, venture capitalists in Silicon Valley and elsewhere around the country were asked about the entrepreneurial endeavors they had backed. Although the specific questions differed from those asked of the convicts, they fell into the same two general categories: outcome and process. The survey included specific questions about their dealings with entrepreneurs, such as "To what extent did the CEO provide you with timely feedback on the performance of the venture?" and "To what extent did the CEO keep you up to date on the performance of the venture?"
You'd expect the venture capitalists, or VCs, to be more analytical and detached in their reasoning than the felons. Simply put, a good investment is one that makes you money. But when we look at the VCs' responses, it's clear that they, too, placed disproportionate weight on whether they felt their voices had been heard.
In analyzing the results, the researchers noticed that "timely feedback from an entrepreneur led investors to feel the entrepreneur was fairer, to trust the entrepreneur more, to be more supportive to the entrepreneur's strategic decisions, and to monitor the venture less frequently." If the investment's financial return is analogous to a prisoner's sentence-an objectively measurable result-the company's CEO is like the defense lawyer. A CEO who kept in touch gave the VCs a much more favorable impression of the underlying venture than did a CEO who was less communicative.
But this overemphasis on communication could be detrimental to a venture capitalist hoping to earn a good return on an investment. The VC-entrepreneur relationship is one in which it really is all about the money, and the frequency with which a CEO stays in touch with a VC has virtually no bearing on the success of the venture. A VC's evaluation of a venture should be only about the bottom line-how well the company is doing. For all he or she knows, the CEO who is uncommunicative might be the very one who is busy working night and day to help his start-up make it.
While the sway of procedural justice and our desire to have our voices heard are important to us all-whether we're car dealers, criminals, or venture capitalists-how we actually define fairness varies dramatically from culture to culture. Say that in the example of Who Wants to Be a Millionaire Henri changed his name to Henry and competed in front of an American audience. American audiences are almost certain to help out a contestant, regardless of his apparent abilities; data shows that in the United States, the "ask the audience" lifeline results in the correct answer more than 90 percent of the time.
When Who Wants to Be a Millionaire was introduced in Russia, though, the production team noticed that the audiences there would often give the wrong answer-and not just to confused souls like Henri. Russian audiences didn't discriminate-they deliberately misled both smart and less smart contestants alike. In fact, Russian audiences were so likely to give the wrong answer that contestants learned to be wary of the "ask the audience" lifeline.
When we contacted the Who Wants to Be a Millionaire production team for an explanation of the Russian phenomenon, they were just as perplexed. But Geoffrey Hosking, an expert in Russian history, had some interesting insights. We caught up with Hosking during his last week as a visiting professor at Princeton, as he was preparing to return to England, where he is on the faculty at University College London. Hosking first became fascinated with Russian culture during the time of Khrushchev; he is especially interested in why socialism was ultimately unsuccessful in Russia. Little did he ever imagine that his research would one day help explain the peculiarities of Who Wants to Be a Millionaire.
To solve the mystery of what prompted Russian audiences to give wrong answers, Hosking took us back in time to peasant villages in the Russian countryside. Before the twentieth century, Hosking explained, peasant communities were governed by a principle of "joint responsibility." Everyone in the community acted together-whether paying taxes, supplying conscripts to the army, keeping peace in the community, or apprehending criminals. The peasants grew up expecting to lend one another a hand.
As the country became more industrial under the Soviet regime, people brought the old country ways to the city. Although life in communal Soviet apartments was cramped and difficult, Hosking explained, it was common for people to lend one another money and small items such as kitchen implements or matches. "It was fairly trivial stuff," he said, "and of course you find that a lot in other communities, not just Russian-but I think in Russia it was more systematic and expected." This attitude also prevailed at factories, where "Russians were constantly responsible for each other's lives."
But the same interdependent community that had your back could also turn against you if you stood out or were seen as different. In Hosking's view, this proclivity stemmed from the perception that "people who departed from the norm could be dangerous to the whole community-whether they were very rich or very poor. Either way, there was a tendency to seek the center and to resent people who were misfits."
And that, explained Hosking, is the key. "If people became very poor they were obviously a burden on the rest of the community. If they became rich it probably meant they were up to no good: they were criminals or did things which endangered the community."
This view of wealth is in direct opposition to Western attitudes toward wealth. "On the whole," Hosking reflected, "Americans regard it as justified if someone becomes rich. Now in Russia, the oligarchs"-a select group of entrepreneurs who found a way to make quick money after the Soviet collapse-"all achieved their wealth by means which were of dubious regard at best. That's the first thing that Russians resent. And secondly I think they resent the very fact that these people have become so much richer than everyone else."
From this perspective, it is clear that the Who wants to Be a Millionaire audiences in Russia see contestants as trying to get rich on the backs of the audience members-and why should they contribute to such unfair behavior?
In their own ways, Henri and the Russian contestants violate a core pillar of their respective cultures' notions of fairness. What's fair in Moscow isn't necessarily fair in Paris or Berlin. As the world economy becomes more global, the differences between cultural interpretations of fairness become increasingly important.
Researcher Joseph Henrich decided to test the cultural universality of fairness. To begin with, Henrich replicated the money-splitting experiment among UCLA graduate students. He decided to use a dollar amount that he knew would be significant to students, and came up with $160, which translated to 2.3 days' worth of work at the grad students' standard university wage of $9 an hour. The rules of Henrich's experiment were exactly the same as those of the original study: you only play once, and you never find out who you were partnered up with.
As in the original study, the most common split offered in the UCLA study was 50/50, which the receiving partner always accepted. After the game was over, Henrich interviewed the participants to see what they had been thinking as they considered their offers. The same word came up again and again: fairness. "I thought that if I offered less than half," participants said, "my partner wouldn't accept the offer." And it turns out that the participants deciding on the split were right. Asked whether they would have accepted an 80/20 split-that is, an offer of $32-virtually all of the partners scoffed. "That would be unfair," they protested. They'd rather go home empty-handed. Some even went so far as to say that they would have categorically rejected any offer that was less than 50 percent.
Next, Henrich took his experiment on the road, heading to one of the most remote places on earth, deep into the Peruvian Amazon to visit the Machiguenga tribe. Eight hours from the nearest major city, the Machiguenga have been isolated from modern society for centuries. They live in small villages, but each family is self-sufficient, making its own tools and growing and gathering its own food.
Henrich brought along a translator who spoke a dialect of Arawakan, the native language. Next, he figured out what sum would be the equivalent of 2.3 days of work for the Machiguenga. Because the Machiguenga don't have their own currency, Henrich looked at what they earned from their occasional work for logging and oil companies that hired local labor. Their pay for 2.3 days of work came to twenty Peruvian soles.
Using that sum as the amount to be divided, Henrich carefully explained the rules of the game to the Machiguenga. But here in the Amazon, the game took a very different turn.
Unlike the UCLA participants-or, for that matter, participants from Japan, Indonesia, and Israel-the Machiguenga who made the split on average offered incredibly low sums to their partners. "While the most common offer at UCLA was a 50/50 split, most Machiguenga offered an 85/15 split, favoring the person making the offer.
Even more strikingly, unlike the UCLA partners, who reacted to such lowball offers with indignation, when the Machiguenga partners were presented with these lopsided splits they nearly always chose to accept the offer. In so doing they were adhering remarkably closely to a rational economic model: from a purely objective, utilitarian perspective, it's logical to accept any offer rather than end up with nothing.
"When interviewed afterward, the Machiguenga who accepted the offers laid out their reasoning.”Several individuals," explained Henrich, "made it clear that they would always accept any money, regardless of how much the proposer [splitter] was getting." Rather than viewing themselves as being treated unfairly by the offering partner, "they seemed to feel it was just bad luck that they were responders [choosers] and not proposers." The Machiguenga choosers viewed any offer as a generous gift. And those splitting the pie didn't see why they should give up half of their "winnings" to someone who was lucky just to get anything.
Some tribe members did make a 50/50 offer. When Henrich interviewed them, he found that each and every one of these people had spent significant time living among modern Westerners and felt the 50/50 split was the fair thing to do.
In the end, the Machiguenga are no more rational than are the UCLA students; they simply have a different perception of what's fair. In Russia it's not fair for one person to get rich. In America it's only fair if the splitter presents an even steven offer. And in the Amazon jungle it's finders keepers.
We don't typically think of fairness as an irrational force, but it dramatically affects our perceptions and sways our thinking.
We've all been in situations where we had to negotiate a position. From an objective, logical perspective, it would make sense to focus strictly on the issue at hand: the offer we're presenting or the price we're asking for. But by talking through our reasons for that price or position, explaining how we arrived at it, and communicating what we feel is the fair thing to do, we can enjoy the same benefits as the attorneys who spent time with their clients and the entrepreneurs who talked frequently with their investors.
When we're busy completing a project at work, rather than assuming the final product speaks for itself, it's good to remember to regularly engage and update members of our team during the process. Similarly, when we travel to another country we should keep in mind that as we exchange currency, we also must shift our notions of fairness. As it turns out, because of these fairness sways, whether we're dealing with an auto dealer or a Machiguenga, it's not always true that what's fair is fair.”