Screwed

Have you ever heard of “The Ultimatum Game?” It goes like this: You get a thousand bucks, but it comes with a condition. The condition is that you have to offer some amount of the money to a stranger. The stranger knows you started with a thousand bucks, and also knows the rest of the rules (as do you) – once you make an offer, there is zero negotiation or haggling. The stranger just gets to say yes or no. If they say yes, the split happens. If they say no, then neither of you gets any money. Zero dollars for both of you. In either case, you part ways and never see each other again.

How much would you offer that stranger? Think of a number.

Now, imagine being the stranger. Would you say yes to the amount you just proposed, or would you burn the whole deal?

There is a really funny trick about human psychology here, and if you can figure it out and then purge it from your own mind, you will make your life incredibly better from this point forward. Here it is: If you offer the stranger 1 dollar (so you keep $999), then the stranger, if they were perfectly rational, would say yes.

But you can’t imagine them doing that, can you? You certainly wouldn’t. You’d be so insulted you’d trash the whole deal. After all, that greedy jerk tried to lowball you!

But here’s the reality: If you ignore all the emotional elements, you have a simple choice. Do you want a dollar, or do you want nothing? A dollar is clearly preferable – yet virtually everyone would rather punish the greedy person, even if it came at their own expense.

Even now you hate this. You’re trying to come up with all sorts of rationalizations for why you shouldn’t take an unfair offer. But that’s because you’re projecting other circumstances onto the choice – you’re using your sense of unfairness as if you were being offered low wages for honest work, or an unfair split of money you earned together. But none of that is true! You’re being offered a tiny windfall, or nothing – and you paid nothing for the choice. So the tiny windfall is better!

We do exactly that all the time. We burn offers that benefit us simply because we think someone else is screwing us over. But how is being offered a free dollar a screw-job? You can’t compare your potential gains to hypothetical amounts that were never on the table. Because if you do, you’ll constantly cost yourself money.

Don’t concern yourself with what anyone else is getting. Just take the best option for yourself each time you can. Otherwise, you’re getting screwed – by you.