Money can't buy happiness. Or can it? Researchers in the fields of neuroscience and game theory have teamed up to create experiments that suggest that sometimes, maybe more often than we know, our financial decisions are driven by our emotional nature.
In the game of “ultimatum,” highlighted by senior editor Gardiner Morse in this month’s issue of Harvard Business Review, a player is given $10 to split with another player according to one very simple rule. The player with the money can offer any amount out of that $10 to the other player. If the offer is accepted, both players get to keep the proceeds of the deal, but if the offer is rejected, then neither player gets anything.
Researchers soon discovered that a “lowball” offer will generally be rejected, leaving the players with nothing, despite the fact that an acceptance would have left both players with at least a marginal payoff. The person receiving the lousy offer is willing to lose the dollar or two they could have made in order to prevent the other player from keeping the remaining eight or nine. Apparently, the wisdom that "something is better than nothing" doesn't always hold true: nothing is better than something if that something comes at the price of unfairness.
Instead of our emotional centers “disrupting” our logical reasoning, what if our logical reasoning is in fact serving our more primal needs?
When
scientists monitored the brain activity of “ultimatum” players, they
discovered that players rejecting lowball offers exhibited significant
activity in a certain region of the brain responsible for feelings of
“disgust.” Whenever an offer was rejected, this activity appeared to be greater than the activity in
the brain centers responsible for “reason,” suggesting that perhaps the
emotional drive for revenge was overpowering the rational drive to
accept any offer provided.
One conclusion commonly drawn is that our emotional drives can cause us to make “illogical” decisions, but this assumes that the emotions themselves are not a part of the logical equation. It assumes that something is always better than nothing, no matter how we feel about the deal. But what if we have it backwards? Instead of our emotional centers “disrupting” our logical reasoning, what if our logical reasoning is in fact serving our more primal needs?
After all, how “rational” is it to accept an offer that leaves us feeling disgusted? What if the brain is less like a battlefield and more like a consensus builder that accepts input from various different “perspectives” and then makes decisions based on the good of the whole? While one “part” of the mind recognizes that walking away with something is better than walking away with nothing, another part is registering its extreme displeasure at being cheated.
How “rational” is it to accept an offer that leaves us feeling disgusted?
From a personal perspective, the decision to turn down the offer makes perfect sense. The belief that we are being treated unfairly is emotionally uncomfortable. It can make us feel angry, bitter, frustrated, and resentful. And letting that unfairness go unaddressed can even make us feel disgusted with ourselves, undermining our general sense of self-respect. One or two dollars is a small price to pay for peace of mind.
From an evolutionary standpoint, the “rightness” of the decision is even more significant. We are social creatures, depending on our relationships with each other for our survival. Registering our disgust with others who behave selfishly by "punishing" that behavior can encourage more cooperative behavior in the future. Any short-term loss is made up for by long-term gains. In fact, when players are asked to play successive rounds of this and other, similar games, the behavior between the players tends to become more cooperative over time.
When push comes to shove, human beings are emotional creatures. We might pursue our monetary goals for the thrill of the hunt itself, or we might be more motivated to increase our family’s financial security, thereby strengthening our social bonds. On the other hand, we might choose to forego certain financial rewards in order to spend more time with our loved ones or to alleviate the discomfort of various negative feelings as in the ultimatum game. Whatever the impetus, our decision-making processes are engaged in the task of improving our emotional state.
Rather than bemoaning the “illogical” nature of our brain circuitry, we would be far better served (both rationally and emotionally) by accepting the emotional logic built into our nature and trying to learn from it. What motivates customers and shareholders to remain loyal to an organization through times of stress? What motivates employees to “give 110%” to their jobs? What do we need as human beings to be content in a work environment? No matter what rational considerations may come into play, our capacity for reason always serves our emotional interests.
