Brexit and the Ultimatum Game
The concept of bargaining, in the most basic of generalizations, is a simple one: give someone an offer that benefits you as much as possible which will still be accepted by the other person. We’ve learned in class that bargaining can be understood logically with concepts like power, network exchange, and Nash Bargaining. A more specific example of a bargaining situation is the Ultimatum Game, where if a deal isn’t met between two people, no one gets anything. As simple as it sounds, this is where things can get messy.
The simple, logical answer to bargaining in the ultimatum game comes down to this: “I’ll try to get as much as possible, and whatever we ultimately decide upon, I should take it, because otherwise I’ll get nothing”. This logic makes sense on paper, but when humans are involved, different incentives come into play. Humans not only value what they get out of a deal, but they also value how they feel about the deal. If they’re bargaining with someone with a lot of power, who only offers them a small piece of the pie, humans will often reject the offer completely and take nothing instead of a small something. This is because though they got less in the deal, they felt better than they would have if they took such an unfair offer. Now, enter Brexit.
In June 2016, Britain voted to remove themselves from the European Union, though they knew it was highly likely that this was a poor decision which would hurt the British economy. Many outside observers couldn’t possibly understand why Britain would choose something that didn’t seem to benefit them in any way. However, psychologists see that this comes down to an ultimatum game. Britain saw the EU as treating them unfairly, where the economic benefits of being in the EU weren’t worth the loss of control Britain had over itself. This correlates directly to an ultimatum game described above, where Britain and the EU are bargaining together.
Britain saw this “bargain” as a highly unfair deal, where while they would receive ‘small benefits’ like a strong economy and political union, the EU was receiving much greater benefits while sucking Britain dry and removing some of their self-jurisdiction. Though from a logical standpoint, and looking at this only as an exchange like in class, it would make sense for Britain to ‘take the deal’ of staying in the EU to receive the benefits. However, the British voters were taking other values into play, like being in control of their country and not feeling indebted to anyone else. These feelings outweighed the benefits in their eyes, and thus they chose to deny the bargain.
We learned in class how different networks lead to different power hierarchies and how these hierarchies affect the results of bargains. We learned that in an ultimatum game between two people, of course it would only make sense to take the deal because receiving something is better than nothing. Humans rejecting these offers, like with the results of Brexit, seem to completely oppose these teachings, but we can see that they actually don’t: when humans are bargaining, it’s not only the money on the table that is of value. Pride and other emotions are involved, and the combinations of different values are what really drive bargains like Brexit.
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