Monkey Economics....
Found this in another forum. Interesting. Doing the same thing on the French and they would have had a strike on the hands....
Simian economics
Monkey business-sense
Jun 23rd 2005
From The Economist print edition
Monkeys show the same “irrational” aversion to risks as humans
ECONOMISTS often like to speak of Homo economicus—rational economic man. In practice, human economic behaviour is not quite as rational as the relentless logic of theoretical economics suggests it ought to be. When buying things in a straight exchange of money for goods, people often respond to changes in price in exactly the way that theoretical economics predicts. But when faced with an exchange whose outcome is predictable only on average, most people prefer to avoid the risk of making a loss than to take the chance of making a gain in circumstances when the average expected outcome of the two actions would be the same.
There has been a lot of discussion about this discrepancy in the economic literature—in particular, about whether it is the product of cultural experience or is a reflection of a deeper biological phenomenon. So Keith Chen, of the Yale School of Management, and his colleagues decided to investigate its evolutionary past. They reasoned that if they could find similar behaviour in another species of primate (none of which has yet invented a cash economy) this would suggest that loss-aversion evolved in a common ancestor. They chose the capuchin monkey, Cebus apella, a South American species often used for behavioural experiments.
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First, the researchers had to introduce their monkeys to the idea of a cash economy. They did this by giving them small metal discs while showing them food. The monkeys quickly learned that humans valued these inedible discs so much that they were willing to trade them for scrumptious pieces of apple, grapes and jelly.
Preliminary experiments established the amount of apple that was valued as much as either a grape or a cube of jelly, and set the price accordingly, at one disc per food item. The monkeys were then given 12 discs and allowed to trade them one at a time for whichever foodstuff they preferred.
Once the price had been established, though, it was changed. The size of the apple portions was doubled, effectively halving the price of apple. At the same time, the number of discs a monkey was given to spend fell from 12 to nine. The result was that apple consumption went up in exactly the way that price theory (as applied to humans) would predict. Indeed, averaged over the course of ten sessions it was within 1% of the theory's prediction. One up to Cebus economicus.
The experimenters then began to test their animals' risk aversion. They did this by offering them three different trading regimes in succession. Each required choosing between the wares of two experimental “salesmen”. In the first regime one salesman offered one piece of apple for a disc, while the other offered two. However, half the time the second salesman only handed over one piece. Despite this deception, the monkeys quickly worked out that the second salesman offered the better overall deal, and came to prefer him.
In the second trading regime, the salesman offering one piece of apple would, half the time, add a free bonus piece once the disc had been handed over. The salesman offering two pieces would, as in the first regime, actually hand over only one of them half the time. In this case, the average outcome was identical, but the monkeys quickly reversed their behaviour from the first regime and came to prefer trading with the first salesman.
In the third regime, the second salesman always took the second piece of apple away before handing over the goods, while the first never gave freebies. So, once again, the outcomes were identical. In this case, however, the monkeys preferred the first salesman even more strongly than in the second regime.
What the responses to the second and third regimes seem to have in common is a preference for avoiding apparent loss, even though that loss does not, in strictly economic terms, exist. That such behaviour occurs in two primates suggests a common evolutionary origin. It must, therefore, have an adaptive explanation.
What that explanation is has yet to be worked out. One possibility is that in nature, with a food supply that is often barely adequate, losses that lead to the pangs of hunger are felt more keenly than gains that lead to the comfort of satiety. Agriculture has changed that calculus, but people still have the attitudes of the hunter-gatherer wired into them. Economists take note.
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Originally Posted by dgb
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