Stop me if you’ve heard this one. A subject (called the proposer) is placed in an isolation booth and given ten dollars to divide between himself and the stranger in the booth next door. The stranger (called the responder) can accept or reject the division. If he accepts, they each take their shares and go home. If he rejects, they each go home with nothing.
In experimental plays of this ultimatum game, responders tend to reject splits that are substantially worse than 50-50. This is offered as some kind of reproof to the principles of economics. After all, the responder is turning down free money.
But so what? People turn down free money all the time. Just this morning, I saw a $20 bill fall out of a guy’s pocket and I returned it to him. I did that because I don’t like taking things that aren’t mine—a sentiment that’s easy to incorporate into orthodox theory. Likewise, if you put me in the ultimatum game (at least as it’s usually run), I’ll turn down whatever I’m offered, whether it’s 50/50 or 20/80 or 80/20. That’s because I don’t feel any better about taking money from the taxpayers who are presumably funding this experiment than I am taking money from the guy in front of me in the checkout line.
Now, not everyone is as moralistic as I am on this point (as I am not as moralistic as some others on some other points), but most people are not psychopaths, so most people are going to feel at least a little squeamish about taking money nonconsensually from others. Some might be willing to overcome that squeamishness in exchange for a reasonable share of the bounty (but not for a smaller share). That doesn’t mean they’re irrational. Quite the contrary. It means everyone has his price. Just like your Principles of Economics teacher taught you.