The Problem with Too Much Fairness

Or, why it’s more important to have the right system than a fair system

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Q: Is fairness a good strategy in every situation?

Today, let’s talk about fairness. Have you ever experienced this feeling of being treated unfairly? Maybe an undeserving colleague got promoted instead of you? Or when somebody broke the line at the ticket counter? Such injustice!

Human beings have a strong need for fairness. Big or small, when we see something unfair done (especially against us), we are enraged. Even a three-year-old has the common sense to scream when they get a smaller portion than their sibling. Not just humans, even monkeys have a sense of fairness.

To illustrate how the perception of fairness affects us, let me explain what researchers call ‘the ultimatum game’. The game is played by two people. One person receives some money (say $100). This first person offers to split the money with the second person (say $50/$50, $70/$30, $80/$20, or whatever they want). This offer is an ultimatum, so the second person only has two choices: to accept or reject the offer. If it’s accepted, they both keep the offered split, and if rejected, they both get nothing.

The purely logical way to play the ultimatum game is for the first person to offer the minimum (e.g., a $90/$10 split) and for the second person to accept it since otherwise they would get nothing, and there is no other negotiation possible. In practice though, the second person rejects offers lower than 30% of the total, because of the ‘perceived’ unfairness of the offer.