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Beware Of Proud Greeks And Ultimatums

Tyler Durden's picture




 

The ballot box and economics textbook are on a collision course around the world, and we thought Nic Colas' (of ConvergEx) analysis of what behavioral economists call The Ultimatum Game was worth a refresher.  That’s where two strangers divide a fixed sum of money, with one person proposing a split and the other accepting or rejecting it.  It’s a one-shot deal, so the proposer tries to work out the minimum amount required to get the other person to go along.  Classical economics says that a $1 proposal out of a $100 pot should work, but in real life (and this study has been done everywhere from the rainforests of South America to the bars of Pittsburgh) it takes 25-50% offers to win the day.  Nic found three recent updates to the Ultimatum Game that each speak directly to the current political state of play in Europe and the United States.  One shows that proud people (or those led by nationalist-minded politicians, perhaps) need higher offers in order to accept a split. The second shows that the Game works even for small amounts.  The last – and the first such study we’ve ever seen from a mainland Chinese university – shows that worries over social status complicate the already difficult mental calculus of "How much is enough?"

All the proposed solutions to the European and American debt crises seem to meet at the crossroads of what is "Fair."  A tough word, that, since it means different things to different people.  A trip to several online etymology resources – the Oxford English Dictionary website sits behind a paywall that would make Hadrian proud – delivered this composite description of the word’s historical usage:

  • From the Old English – “Beautiful, lovely, pleasant.”
  • From archaic Scandinavian languages – “Beautiful” or “fit”
  • From the Middle Ages – “Light complexioned” or “free from bias”.  The latter is from another strain of the word, meaning “Moral, or pure, or free from blemish.”
  • From the 1850s – the words starts to become incorporated into sports commentary, meaning “Proper.”

In other words, “Fair” in medieval times is the linguistic equivalent of today’s “smoking hot, but not too trampy.”  How that meaning migrated to its current definition of “Equitable,” “legitimate” or “honest” must be a long journey.  Too bad – it seems more civilized and sweeter to say that David Beckham or Kate Upton or (fill in your favorite celebrity name here) is “Fair.”

And just as the word has evolved over the years, so has the view of economists on its role in human decision-making.  Classical economics had little use for the concept during its heyday in the middle part of the last century.  Hand a logical thinking human a $1, and that will always make them feel better off.  Why would it be otherwise?  The notion that the marginal dollar is always welcome at the city gates of consumer psychology is pervasive in modern economic theory.  It even makes an appearance in that credit card advert with Jimmy Fallon and the baby that is on every 15 seconds across America: “Who doesn’t want more money?”

In the early 1980s, behavioral psychologists studying how humans bargain came upon an elegant experiment that proved classical economics had the marginal dollar construct very, very wrong (Kuth, Schmittberger, and Schwarze, 1982).  They asked pairs of people, strangers to each other, to split a pot of money.  The only catch was that it was a one-shot deal.  One person proposes a split, the other person accepts or rejects it.  Accept, and both parties keep the money as agreed.  Reject, and no one gets anything.  The marginal dollar construct of classical economics would have you believe that the person in charge of offering the split could put out $1 out of $100 and get the other person to agree.  Laughably wrong, of course.

The Ultimatum Game, as researchers now call this experiment, is the single most replicated and refined study in what is now called behavioral finance.  It has been done with illiterate Amazonian tribespeople, drunk students on pub crawls in Pittsburgh, and both men and women jacked up on testosterone.  The results are always the same: the person proposing the split needs to offer up at least 20%, and usually closer to 50%, to have a change of seeing their offer accepted.  It seems a genuine constant of human nature that people need to feel that they are being treated “Fairly.”  Moreover, the price of this requirement is explicit, as they are willing to give up real money just to make sure the other person doesn’t get more than they deserve.

I recently came across three updates to The Ultimatum Game that further expand on this central theory of perceived “Fairness”:

  1. The money isn’t actually the issue.  Amazon has an online portal called www.mturk.com that is a effectively a marketplace for short projects and the people that want to work on them.  Israeli researchers leveraged this platform to run a modified Ultimatum Game using only small amounts of money.  Instead of $20 or $100, which are the more common monetary pools used for similar studies, they ran the game with over 700 subjects using either no money at all or just $1.  The idea here was to test if the subjects would grow more “Rational” when only de minimus amounts were on the table.  The answer: an unequivocal “No.” Even when small amounts were at stake, the “Fairness” issue still ruled the day in the same proportions as when “Real” money is on the line.  See here: http://www.plosone.org/article/info%3Adoi%2F10.1371%2Fjournal.pone.0031461.
  2. Self-worth explains part of the puzzle.  Do you know someone who always dates the “Wrong” people or lets others walk all over them?  Don’t let them be a subject in The Ultimatum Game, because they are about the only ones for whom the $1 out of $100 looks like an acceptable split.  As it turns out, self-worth is a strong determining factor in how much someone accepts in the game.  See here:  http://www.plosone.org/article/info%3Adoi%2F10.1371%2Fjournal.pone.0015095.
  3. And notions of social status explain some more.  In the first Ultimatum Game study I have seen written up from mainland Chinese researchers, the form of the game is altered to give the person judging the offer a sense of what offers their peers in the study received.  If you tell a subject that their peers are seeing 35% offers, they are much less likely to accept a 30% proposed split.  See here: http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3213677/.

One way to look at the current tensions in both European and American debt discussions is as an Ultimatum Game between governments and individuals.  Take Greece, for example.  Classical economics would say – and you will hear a lot of policymakers echo – that the Greeks should take whatever deal they can.  Something is better than nothing.  All the lessons of the Ultimatum Game studies point to an entirely different conclusion.  The Greek feel that they have been treated unjustly. After all, the wealth created by the fraudulent government accounting really accrued to only a handful of people.  So whatever deal might be on the table is not “Fair” (that word again…).  And even if it means being materially worse off, Greeks may well choose that route.

And the new studies I highlight in this note seem to push that conclusion even more strongly.  The Greek people are nothing if not proud.  And they are also sensitive to the notion that the turmoil of the last three years has diminished their social standing in the European community.  Put those two factors together, and the upcoming vote on June 17th feels even more unsettled than one would think.  At the end of the day, the stresses of the ongoing financial crisis are not just about the money.   And since humans react the same everywhere around the globe when it comes to the Ultimatum Game, the lessons of that study are just as relevant in Athens, Georgia as Athens, Greece.   The upcoming U.S. presidential election will certainly prove that.  

 

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Thu, 05/24/2012 - 01:31 | 2457955 UP Forester
UP Forester's picture

Hungry, pissed-off, cornered people tend to not act the way you want them to.

Thu, 05/24/2012 - 01:55 | 2457981 Ahmeexnal
Ahmeexnal's picture

MSM is mute about an ongoing disaster:

Nuclear blast onboard the USS Miami (Los Angeles class nuclear powered submarine) docked at Portsmouth.

Paging black swan....Paging black swan...

http://www.liveleak.com/view?i=058_1337831903&comments=1

Nuke Blast on US Sub Still Burning

By Joey Cresta
jcresta@seacoastonline.com
May 23, 2012 11:04 PM

KITTERY, Maine — A fire that went to at least four alarms was still burning aboard the USS Miami nuclear-powered submarine Wednesday night at the Portsmouth Naval Shipyard, six hours after it began, according to the yard's commander.While the fire - located mainly in living areas and in control spaces - continues to burn, the situation is improving, said Base Commander Capt. Bryant Fuller in a
statement to the media at about 11:30 p.m. Wednesday. Six people were injured fighting the fire and were either treated at the scene or transported to a hospital, said Fuller. One of the injured was a
firefighter who suffered heat exhaustion but who was conscious and alert, he said.

 

Thu, 05/24/2012 - 02:13 | 2458026 Dr. Sandi
Dr. Sandi's picture

Nuke Blast? I don't think heat exhaustion from a smoldering mattress is quite my personal definition of a "Nuke Blast."

I'm more into a bright flash and everything within miles being vaporized.

I'd almost think somebody is trying to manipulate my emotions by invoking the "Nuke Blast" scenario.

Thu, 05/24/2012 - 02:45 | 2458053 Ahmeexnal
Ahmeexnal's picture

SHTF.....Not "IF", but "WHEN":

 

http://www.prisonplanet.com/fukushima-if-number-4-collapses-japan-will-b...

Fukushima: If Number 4 Collapses, Japan Will Be Evacuated

Chris Canine – who has 15 years experience as a health physics technician, chemist and radiation safety instructor – told Energy News that if number 4 reactor fuel pool at Fukushima collapses, Japan will be evacuated

 

 

Thu, 05/24/2012 - 03:48 | 2458103 Harlequin001
Harlequin001's picture

I agree, I think they should just let TEPCO abandon the site. That would get the stock market going again and like Bernanke said, a rising stock market will do more for the recovery than anything else.

Let's face it, what's a few hydrogen explosions between friends? We're cool, and anyway, radiations' good for you, so the Japanese will probably be healthy for the next few million years, and if they do evacuate Japan, we're all going to have to suffer all these two hundred year old super healthy people living amongst us bowing and fucking smiling at us all day.

Nah, leave then where they are...

Thu, 05/24/2012 - 06:34 | 2458235 HungrySeagull
HungrySeagull's picture

They had over a fucking year to evacuate.

And my plan of nuking the place into rubble until covered by the ocean would have been a brief show of radiation etc instead of this... evolving horrorshow.

Even if you DID evac Japan, where you gonna stick em? In one of the many Chinese make work cities?!

Thu, 05/24/2012 - 15:04 | 2459803 stacking12321
stacking12321's picture

History shows again and again how nature points up the folly of man
Godzilla!

Oh, no, they say he's got to go
Go go Godzilla
Oh, no, there goes Tokyo
Go go Godzilla

Thu, 05/24/2012 - 04:19 | 2458057 Oh regional Indian
Oh regional Indian's picture

Clearly all these transactiones need the now famous "Fairness Cream", long a best-seller in cosmetic circles in India.

To be fair...... became... Oh, to be Fair.

In all fairness though, when the basis of this clusterflock goes back more than a millenium, it's really without point to scratch the surface and say "Ah, I see it, it's a dirty tranche and an un-fair clause".

A Santa Clause. Every contract should have a Santa Clause. The "By Jimney, it's the Chimney" Clause. 

BeClause, all this languaging (and it's origins) of Causes and Clauses has far deeper ram-i-fications than most can even begin to IMAGINE.

One word, one definition, Black's Law Dictionary.

human Being: A Sea Monster, a Monster Birthed from the Sea.

Check it out. Then put this verbiage of Lex-ness in perspective.

ori

the-deep-perversion-of-language

Edit: Oooh, don't like being called sea-monsters, anyone. ;-) and that is just the tip of th eice-berg. If you don't know the root of language, you don't know SHIT. You especially do not know any LAW. Zilch. Deal with it.

Thu, 05/24/2012 - 02:59 | 2458065 wretch
wretch's picture

"Nuke Blast"?  Why repeat that shit?

Thu, 05/24/2012 - 04:03 | 2458117 Aristarchus of Samos
Aristarchus of Samos's picture

Excuse me Sir, but if it injured six people, then it cannot be characterized as a 'Nuclear blast' (sic).  If you don't know why, then perhaps you shouldn't comment?

Thu, 05/24/2012 - 06:36 | 2458237 HungrySeagull
HungrySeagull's picture

The US Navy trains world class damage control. It is life and death, no matter how, where or hot the thing gets.

Fire is the number one danger of the sea.

I hate to say it, it could be as simple as a smoke left lit during bed time or a wiring fault.

Thu, 05/24/2012 - 03:55 | 2458110 williambanzai7
williambanzai7's picture

ATHENS DEBT METRO

Thu, 05/24/2012 - 04:07 | 2458119 Harlequin001
Harlequin001's picture

Kat Pyss Kovenantos....

LOL

Thu, 05/24/2012 - 04:19 | 2458126 Harlequin001
Harlequin001's picture

What happened to the picture?

aaand now its back. I give up...

Thu, 05/24/2012 - 06:12 | 2458215 Mentaliusanything
Mentaliusanything's picture

Brilliant Banzai _ you have covered all existing lines. 

But me thinks the Greeks maybe building the new main line "getiuosthefigoutofhellandlivus"

love your stuff

Thu, 05/24/2012 - 06:42 | 2458244 boogerbently
boogerbently's picture

It reminds me of Khaddafi's "Line of Death." LOL

What ever happened to him.....and his country?

Why is Greece, with it's PITTANCE of a sovereign debt, being made into such a boogeyman/monster?

I haven't figured out "their" (TPTB) angle, yet.

Thu, 05/24/2012 - 11:00 | 2458858 BigJim
BigJim's picture

It's called base and tier 1 capital... look it up; it's in The Banker's Big Book of Uh-oh.

Thu, 05/24/2012 - 01:32 | 2457956 q99x2
q99x2's picture

'bars of Pittsburgh' Now why'd ya have to go there?

Thu, 05/24/2012 - 01:59 | 2457999 Ahmeexnal
Ahmeexnal's picture

http://bostonglobe.com/metro/2012/05/23/harvard-alumni-directory-contain...

Unabomber Ted Kaczynski lists self as ‘prisoner’ in Harvard alumni directory

 

The Harvard alumni directory for the class of 1962, which is celebrating its 50th anniversary, contains a bizarre entry for Ted Kaczynski, the graduate who went on to send deadly bombs through the mail as the mysterious Unabomber. While many of his classmates sent in lengthy updates on their lives for the 2 ½-inch-thick “red book,” the entry for Kaczynski only contains nine lines. Under the awards section, the listing says, “Eight life sentences, issued by the United States District Court for the Eastern District of California, 1998.”

Thu, 05/24/2012 - 03:52 | 2458106 Harlequin001
Harlequin001's picture

Well, at least he hasn't lost his sense of humour...

Thu, 05/24/2012 - 07:28 | 2458286 bdc63
bdc63's picture

Future Plans:  Burning in hell

Thu, 05/24/2012 - 01:36 | 2457962 Spitzer
Spitzer's picture

Hey you know what...

The ECB could have just printed up Euros to buy greek debt and there would be no problems at all. It works in California.

Thu, 05/24/2012 - 01:36 | 2457964 Bizaro World
Bizaro World's picture

"It's time for them to pay their fair share"......where have I heard that before?

Thu, 05/24/2012 - 03:01 | 2458066 Harbanger
Harbanger's picture

Judge Judy?

Thu, 05/24/2012 - 06:14 | 2458216 jeff montanye
jeff montanye's picture

iceland?

Thu, 05/24/2012 - 01:37 | 2457969 Milestones
Milestones's picture

A most interesting post !! I would tend to agree with the author; that the issue of pride and insults play a far more important role than many realize.                               Milestones

Thu, 05/24/2012 - 01:44 | 2457970 q99x2
q99x2's picture

Ron Paul for president.

Thu, 05/24/2012 - 02:23 | 2458028 Dr. Sandi
Dr. Sandi's picture

Ru Paul for president. He can be Commander in Chief and First Lady at the same time, saving us big bux.

Thu, 05/24/2012 - 04:31 | 2458135 Oh regional Indian
Oh regional Indian's picture

Worse, if RP does, by some great twist of fate, get elected, people might end up with???

 

Rue Paul!

ori

Thu, 05/24/2012 - 03:16 | 2458078 HarryM
HarryM's picture

After yesterday's stunning comeback it became clear to me that when shorting really becomes profitable, shorting will be suspended.

When it becomes clear that the markets will really collapse, prior to the collapse, trading across all global indexes will be suspended.

The Ultra-Rich and powerful will then use their powerful political connections to work out backroom deals to ensure that they remain rich and powerful and in control, and that the poor remain poor.

Once the deals are decided, debt cancelled and the like, the markets re-open - and we start from the beginning

 

 

 

Thu, 05/24/2012 - 03:56 | 2458111 financial apoca...
financial apocalyptic contagion's picture

or the poor people are like fuck that

Thu, 05/24/2012 - 06:38 | 2458238 AnAnonymous
AnAnonymous's picture

The Ultra-Rich and powerful will then use their powerful political connections to work out backroom deals to ensure that they remain rich and powerful and in control, and that the poor remain poor.

__________________________________________

US citizenism has indeed proven to the ultimate threat to the rich and powerful.

Cant think of worse.

They are scared. Very, very scared.

Thu, 05/24/2012 - 08:26 | 2458347 Crisismode
Crisismode's picture

What is "US Citizenism"?

 

Is that some kind of medical condition?

Thu, 05/24/2012 - 06:45 | 2458248 boogerbently
boogerbently's picture

I have, roughly, the same philosophy.

THEY need US to buy their shit!

Thu, 05/24/2012 - 08:27 | 2458351 AnAnonymous
AnAnonymous's picture

US citizen elite might have needed US citizen middle class to enable the huge concentration of wealth and make a cleansweep against other elite around the world.

Now claiming that they need US citizen middle class to consume the remaining resources, that is quite a claim.

Like claiming the noble needed the poachers to consume the game of the noble's woods.

Thu, 05/24/2012 - 01:41 | 2457971 HD
HD's picture

While I agree with the premise of the article - let's face it, Greece isn't benefiting much under their current "bailout". A Goldman technocrat was installed to give bankers everything they wanted while throwing a few pennies at the Greek people who were told to be happy fighting for scraps.

You can be broke or be broke AND in impossible debt. Which do you think the Greek people will choose...

Thu, 05/24/2012 - 02:11 | 2458011 CompassionateFascist
CompassionateFascist's picture

The Greek Sheeple will vote (again) for the same Center-Left debtgang that made the current mess. Ditto in America, if the System survives until November...but it won't. I take note of the fact that Morgen Stanley Smith Barney is pulling all of its PM accounts away from Citigroup by the July 4th weekend. CG will be the first of the TBTFs to collapse, & look for AllHell to break out shortly thereafter. Invest in lead.

Thu, 05/24/2012 - 01:40 | 2457975 Yen Cross
Yen Cross's picture

 Tyler Get's it! Fantastic post! I especially enjoy the 1-100$ scenario/ on a 25% RoI .

 

  Cash on The Barrel Head, Takes on a whole new meaning!

Thu, 05/24/2012 - 01:41 | 2457979 ebworthen
ebworthen's picture

Leave the Euro and re-institute the Drachma for a 50% loss yet have control over your currency and not have the Germans or the rest of Europe kick you around with "austerity"?

Yeah, they'll take that 50%, they're just getting what they can while the money from ECB is "free".

Thu, 05/24/2012 - 05:13 | 2458176 Azannoth
Azannoth's picture

The problem is that nobody in today's world thinks 50%(fifty/fifty) is anywhere near "Fair", everybody wants to get > 80%+ and settle for no less than 70%+

Thu, 05/24/2012 - 06:46 | 2458251 boogerbently
boogerbently's picture

I think, the problem is, many people think 50-50 is a "fair" deal when they're getting 50% of YOUR stuff!

Thu, 05/24/2012 - 01:50 | 2457987 carbonmutant
carbonmutant's picture

If countries are no longer TBTF what excuse do banks have?

Thu, 05/24/2012 - 03:33 | 2458085 zhandax
zhandax's picture

Outstanding point!  I am willing to tolerate a year of gut-wrenching deflation (1921-style-read about it; it was so quick everyone has forgotten) to see these maggots purged from the system.

Thu, 05/24/2012 - 01:51 | 2457989 icanhasbailout
icanhasbailout's picture

What's the "no deal" option in the upcoming election, where the banking cartel is offering the people a nickel in the split?

Thu, 05/24/2012 - 01:59 | 2458002 The Reich
The Reich's picture

I'll demand the full amount plus interest frum zee Greeeeks.  Sounds fair to me.

Thu, 05/24/2012 - 02:05 | 2458012 Jack Sheet
Jack Sheet's picture

"fair enough" in German: blond genug

Thu, 05/24/2012 - 02:15 | 2458015 Milton Waddams
Milton Waddams's picture

In other worlds:

This is the type of info rank and file Congress Muppets are presented with: http://www.fas.org/sgp/crs/misc/R41332.pdf

Further, stop putting your kids into early classes to learn 'Chinese': http://www.fas.org/sgp/crs/row/R41007.pdf

 

 

Thu, 05/24/2012 - 02:09 | 2458020 Cult_of_Reason
Cult_of_Reason's picture

To the people of Paris (Greece), the Bastille (Germany) was (is) a symbol of brutality and totalitarian power.

The prison only held seven prisoners. But the storming of the Bastille had done far more than release these seven men. It had brought an ancient system of royal (EU) tyranny to an end. Upon learning that the Bastille had been taken (Greece voted against eurocrats), King Louis XVI (Merkel) asked an aid (Schaeuble), "Is this a revolt?" The answer came swiftly: "No, Sir (Frau). It is a revolution."

Two days after the storming of the Bastille, the National Assembly ordered that this symbol of despotic power be burned to the ground. The crowds cheered as the prison walls crumbled and finally grass grew where the Bastille once stood.

Thu, 05/24/2012 - 02:59 | 2458064 Ghordius
Ghordius's picture

nicely done, this comparison

any semblance to reality?

there is a widespread media campaign targeting the "reason" in getting back the drachma and still the Greeks answers polls about keeping the EUR with a resounding yes, first 60% two years ago, then 70% last year and just shortly 80%...

meanwhile SYRIZA leaders are currently in Germany explaining that they don't want to exit the EUR, they just want better conditions. in my book it's called bargaining

of course, this is not what the City of London led media wants to hear or propagate, they prefer to expand on manuals of "how to exit a currency union", which includes endless articles about how fast and secretly this can be done and constantly omitting that some key parts would involve new laws from parliament - how secretly can this be done?

the best rumour was about this British firm printing Drachmas - if the Greeks really were printing a new currency - for which they haven't the political will - they would go to one of the three firms that specialize in this market and quietly print the banknotes for dozens of other countries instead of a gossipy UK one.

get some reality, the "prison" is in your head

Thu, 05/24/2012 - 03:05 | 2458072 AnAnonymous
AnAnonymous's picture

any semblance to reality?
_____________________________________________

Who cares?

US citizens wont be US citizens without their addiction to US citizen cheap propaganda and fantasy.

Thu, 05/24/2012 - 03:18 | 2458079 Ghordius
Ghordius's picture

I still don't agree with your label (I'd prefer westerner) but I have to agree with your statement, there is a certain addiction to simple explanations

btw, a very small but interesting detail: the Greek President has chosen as head of the provisional government a judge who graduated from the German school in Athens, speaks fluently German and who's father was called Otto, a very German name that was sported by a Greek king (imported from Bavaria), too.

beware of simple explanations

Thu, 05/24/2012 - 03:29 | 2458087 AnAnonymous
AnAnonymous's picture

Westerner?

How?

The western part of the world is a geographical notion. It is the same pool as using American to label a set of beliefs known as 'Americanism' and less ambiguously refered as US citizenism.

Is a westerner anyone who lived, live, will live in the western part of the world.

Any set of beliefs developed in the western world qualify for the adjective westerner.

Japanese are US citizens (as accepted by other US citizens) They are easterners though.

Western easterners? Eastern westerners?

US citizenism is first and above all a state of mind that can be adopted by anyone(even though genetically, some look as they are more inclined to, like Indo Europeans)

It is kind of part of US citizen game to try to dilute responsibility and causality by expanding the base and encompassing people who have little to do with their business (white people, americans, westerners) but still, one must remember that the King was a westerner too. Hard to sell him as a US citizen though.

Thu, 05/24/2012 - 08:36 | 2458371 Crisismode
Crisismode's picture

If the Japanese are "US Citizens", can they get a US passport just by applying for one?

 

How about Canadians, Australians, British, etc? They ALL can get US passports just by applying for it?

 

Great, now we can tax all those "US Citizens" and all that revenue will mean our fiscal problems are OVER!

 

 

Thu, 05/24/2012 - 03:33 | 2458089 gwar5
gwar5's picture

You still kicking about 'US citizenisms'?  After 5 months, it's now official. You have OCD.

Thu, 05/24/2012 - 06:36 | 2458236 AnAnonymous
AnAnonymous's picture

5 months? make it something like 15 months of reported activity on this site.

(it took more than 15 months to get a grasp on what is 'Americanism')

Well, as to OCD, many US citizens are obsessed by cheap propaganda and fantasy. They cling to it as if it was their ultimate life line.

Thu, 05/24/2012 - 06:50 | 2458257 boogerbently
boogerbently's picture

You make my brain hurt.

I'm gonna go watch Jersey Shore.

Thu, 05/24/2012 - 08:45 | 2458393 Terminus C
Terminus C's picture

Despite his stuggle with the english language and his 'interesting' verbiage, AA has been consistently describing the attitudes of subjects of the anglo-american empire.  While I do not always agree with him/her there is certain truth to their understanding. 

To be 'fair' Jersey Shore is exactly the issue AA has with 'us citizenism' ;)

Thu, 05/24/2012 - 03:28 | 2458086 gwar5
gwar5's picture

I think Greeks like the EUR because conversion to the Drachma will mean an immediate 50% hit to the average saver. Who wants that? You might get different polling results if you ask Greeks if they would rather keep the EUR, on the condition they surrender, and hand over 50% of their EURs to Germany.  

Thu, 05/24/2012 - 06:00 | 2458206 Ghordius
Ghordius's picture

I don't agree. And Germany for all purposes is giving, not taking, and for all media bashing and re-direction is still the best friend of Greece inside the EU and the EZ. They are having a discussion on it, yes.

The question the Greeks answer is simple and they understand the meaning:

Do you want to keep the EUR (a relatively "hard" currency - meaning that servicing debts is hard) or do you want to go back to the Drachma (a currency that would be "softer" - meaning that servicing debt would be easier).

Parallel question in the US: Do you want to keep the USD as it is or do you want to have it gold-backed (i.e. "harder", i.e. making servicing debts harder).

Parallel question in Scotland: do you want to break from the British Pound?

Thu, 05/24/2012 - 06:23 | 2458223 jeff montanye
jeff montanye's picture

the debts will not be serviced.  

iceland is the future.

Thu, 05/24/2012 - 06:30 | 2458230 Ghordius
Ghordius's picture

I thought Iceland refused to bail out their banks, i.e. incouring more debt. As far as I know they are still servicing their previous sovereign debt.

Having said that, yes, historically in a "soft" money environment you print and inflate problems away, in a "hard" money environment you default problems away.

Thu, 05/24/2012 - 07:15 | 2458274 Sandmann
Sandmann's picture

Parallel question in Scotland: do you want to break from the British Pound?

 

They cannot without changing The Act of Union 1707 which affects Royal Bank of Scotland and Bank of Scotland because Scottish private banks issue Scottish banknotes.  It would also cut Scottih politicians off the dripfeed that gibves the an automatic override on public spending in England by the Barnett Formula.  The only people who want to cut Scotland adrift are the English.

Greece has good geography and could join a Mediterranean Currency Union with Turkey and backed by Saudi Oil Wealth

Thu, 05/24/2012 - 14:17 | 2459607 nicxios
nicxios's picture

Germany is the best friend of Germany. They have realized short-term economic gains from the crises to the south, much greater than the cost of "bailouts" which has been overstated according to a recent German investigative reporting team. 

Thu, 05/24/2012 - 10:09 | 2458677 robertocarlos
robertocarlos's picture

If they spend the money locally it will be worth the same.

Thu, 05/24/2012 - 04:23 | 2458128 Sandmann
Sandmann's picture

the best rumour was about this British firm printing Drachmas - if the Greeks really were printing a new currency - for which they haven't the political will - they would go to one of the three firms that specialize in this market and quietly print the banknotes for dozens of other countries instead of a gossipy UK one.

 

Show anywhere that De La Rue has ever stated it is printing Drachmas.

De La Rue Currency

As the world's largest commercial currency printer and papermaker, De La Rue Currency is involved in the production of more than 150 currencies.

De La Rue Currency provides market-leading banknote paper, printed banknotes and an unparalleled portfolio of banknote security features, including cylinder mould watermarks, security threads, a wide range of printed features and sophisticated optically-variable devices. We work in partnership with our customers, offering associated services in currency management, counterfeit analysis and training, public education, technology partnerships, and design and origination.

http://www.delarue.com/ProductsSolutions/BanknoteProduction/TheBanknoteL...

 

In 2003 the Company acquired the Debden based banknote printing operations of the Bank of England.

De La Rue is printer to the European Central Bank and The Bank of Greece

http://www.zerohedge.com/news/de-la-rue-warming-new-drachma-printer

Why would Greece need an outside printer one may ask? Well, the country ran out of ink...INK... when it had to print tax return forms. And ink just happens to be a crucial component of toner.

We hope that makes it clear

NO Tyler it is not, but this might explain -

De La Rue is printer to  The Bank of Greece

speculation is growing that close French rival Oberthur is preparing a second takeover approach for the British banknote printer.

Thu, 05/24/2012 - 06:44 | 2458247 Ghordius
Ghordius's picture

just a small note to this: last time I looked there where six currency printers servicing this market, and nearly all of them claim to have some hundred sovereign customers (math be damned). They all keep secrecy about the details of their customers (yes, I take the "gossipy" back, it was not meant seriously). Nevertheless I'm astonished about De La Rue printing for the ECB - part of the EU freedom of taking part to subcontracts? For sure De La Rue does not print all EUR notes.

Of course I (presumably) agree with you, the "there is no ink" issue is taken completely out of context: the original story was one of burocratic insubordination against printing tax return forms. There was no will in printing, hence the lack of components.

Thu, 05/24/2012 - 04:06 | 2458118 kikkoman
kikkoman's picture

you should look up what came after that.

Thu, 05/24/2012 - 02:23 | 2458036 rob2360
rob2360's picture

Interesting article but  what if the pot was $1M and I offered you $10,000. Would you turn it down then? I would still be offering the same derisory percentage (1%) but perhaps the dynamics are now different. Who would really reject $10,000 free cash just on principal to deny me the remaining $990,000?

Thu, 05/24/2012 - 02:54 | 2458058 Deo vindice
Deo vindice's picture

Me. Because I don't need the 10,000. I would not settle for less than the split unless I was in need of the lesser amount.

Thu, 05/24/2012 - 04:24 | 2458132 schizoid
schizoid's picture

So let's raise the stakes some more. $99 billion for me, $1 billion for you. Are you still going to say no?

Thu, 05/24/2012 - 09:19 | 2458493 NanoTrader
NanoTrader's picture

$99 billion for the bank and $1 billion for everything else? I thought we were talking hypothetically, not in real economic terms.

Thu, 05/24/2012 - 10:37 | 2458761 Deo vindice
Deo vindice's picture

@ Schzoid So let's raise the stakes some more. $99 billion for me, $1 billion for you. Are you still going to say no?

At that point I would be asking to meet the guy who gave the 100 billion to play with. But this does raise an interesting point.

When this test was done with different cultures and groups, did they take into account that for some people $100 means a lot more than to others? I maintain that a person's personal situation in terms of relative wealth to others around him (family, neighbours, co-workers, etc), has the largest impact upon his or her decision.

Finally, this test reveals more about the person making the offer than it does about the person receiving it. I simply don't want to do business with an overtly greedy person.

Thu, 05/24/2012 - 04:26 | 2458133 Nobody For President
Nobody For President's picture

Me to - fuck you, you greedy fuck - 400 grand minimum or we both walk broke.

Thu, 05/24/2012 - 06:17 | 2458218 Augustus
Augustus's picture

Do it the Old Style way of the Middle East.

Accept the offered $10,000.  Smile and say Thank You.

Return is a few hours and remove some fingers or limbs, enjoy the women, take the entirety of the $990,000 remaining.  Blame the Offeror for the troubles and announce that the world has been rid of a Cheat who deserved punishment.

 

 

Thu, 05/24/2012 - 02:31 | 2458044 chump666
chump666's picture

 

Wires:

Also rumour N Korean is ready for nuclear test

Thu, 05/24/2012 - 06:39 | 2458239 HungrySeagull
HungrySeagull's picture

At least they bury their mistakes.

Whoopie.

Thu, 05/24/2012 - 02:54 | 2458055 scaleindependent
scaleindependent's picture

Inequity Aversion; the response to moral hazard.

"If it aint fair, no one is getting nothing, biatch!"

Thu, 05/24/2012 - 03:16 | 2458077 AnAnonymous
AnAnonymous's picture

This must happen in a different world than US driven world.

Because, if for ones, US citizens have never let inequity and inequality block their path.

US citizens have been thorough agents to spread inequality and inequity, bringing new divisions, new undue comparisons.

By the way, while US citizens claim themselves to be specialists in human nature (that is human nature), how surprising it is they've just discovered this human feature.

Human nature is well known by US citizens that they required studies to validate that feature, 200+ years after the start of US citizenism.

How astounding.

Thu, 05/24/2012 - 09:00 | 2458432 Terminus C
Terminus C's picture

I think you need to revise your understanding of the concept of 'us citizen".  As Ghordius pointed out the term 'westerner' was a more apt description.  You were correct in saying that was more of a geographical term, an illogical one at that when residing on a spherical planet.  However, the 'citizen' you are looking to categorize is a modern liberal/democratic citizen (not as catchy as US citizenism I guess).  The US does not have exclusive domain over the development of this 'citizen' which is where some of the resistance to your comments is coming from.  This system was really developed in western Europe, particularly England, France and Germany, (which is where the term 'westerner' comes from) and later transferred to the U.S. (achieving dominance in the U.S. after the civil war).  The US, Britain, France and Germany have been the economic, military, political and social dominators of the world for the past 200 years and it is their idea of society that you describe as 'US citizenism'. 

 

Thu, 05/24/2012 - 11:24 | 2458957 Ghordius
Ghordius's picture

very well articulated, Terminus C

Of course Japan is a special case, during the Meiji Restoration they introduced plenty of western systems & concept (from Prussia), so a lot of the way they do things is western even if they are fundamentally eastern.

perhaps AnAnonimus is looking for a different term, see http://en.wikipedia.org/wiki/Bourgeoisie

it has been misused by the Communist Doctrine because for it the bourgeois is the enemy, typically against all totalitarian systems, owns and cherishes his capital and the related culture, and has a fundamental split between the "grand" bourgeois and the "small" bourgeois, as seen in the rift between several parties in liberal democracies...

Thu, 05/24/2012 - 14:05 | 2459551 nicxios
nicxios's picture

An American doesn't care about the iniquity of a political system, only it's inconvenience.

Been that way since 1776.

Thu, 05/24/2012 - 02:55 | 2458059 Olympia
Olympia's picture

How is it possible that the European Union allows the weak states to enter the international money market and borrow the money they need without help – based on their own potentials? How is it possible that the “chain” of interests of euro can let its weak “links” exposed to outside pressuresHow is it possible for a “herd” with common interests to let each “ship” defend itself against the wolves, without help, and its general security threatened? How is it possible for Greece, which represents a minor 3% of the Eurozone’s economy, to be allowed to threaten the other 97% of that economy, due to the latter’s weakness?

The European Union should be the one borrowing from the national banking system – thus dealing with profiteers itself based on its overall potential – not its weak “links” alone. The latter should be under the EU’s protection and constant monitoring. They should borrow from it at a subsequent time and if they became victims of profiteering, the problem should be kept in the bosom of the euro. Domestic profiteering should bring profits to Europe’s influentials, therefore bring profits in the euro area, and not threaten it.

From the Wall Street Crash of 1929 to the Global Financial Crisis of 2007

 

www.eamb-ydrohoos.blogspot.com/2010/02/ten-plagues-of-pharaoh.html

 

Authored by Panagiotis Traianou

Thu, 05/24/2012 - 03:03 | 2458067 AnAnonymous
AnAnonymous's picture

Made me laugh.

Kind of incredible when you think of it.

This US citizen author gives the etymology of fair:

________________________________________________
•From the Old English – “Beautiful, lovely, pleasant.”
•From archaic Scandinavian languages – “Beautiful” or “fit”
•From the Middle Ages – “Light complexioned” or “free from bias”. The latter is from another strain of the word, meaning “Moral, or pure, or free from blemish.”
__________________________________________________

Later, he wonders how this older world came to mean the same as equitable, which was introduced later in the english language.

Ummm, lets make a wild guess. Maybe that is because equitable conveys similar concepts?

Thu, 05/24/2012 - 03:33 | 2458090 Harbanger
Harbanger's picture

Confucius laughed and said, US citizens also describe a gathering of stalls and amusements for public entertainment, as a fair. 

Thu, 05/24/2012 - 03:05 | 2458071 gwar5
gwar5's picture

The answer for the new sovereign elitist class is to continue to grind the masses down with Psyop pain until we are willing to accept less freedom and a lower standard of living which will allow them to remain in the style to which they have become accustomed. 

Thu, 05/24/2012 - 03:11 | 2458075 AnAnonymous
AnAnonymous's picture

That could be one motive.

It is not.

US citizen elite has so much benefited from US citizenism (compared to previous other systems) and has so much concentrated wealth thanks to it that their standard of life is guaranteed for several generations.

Actually, the decrease in middle class might be the event that will impact their standard of life down, as corporations are a product of middle class societies.

No matter how hard and how proficient the US citizen elite is, they can not fight the fact that the resources required to support in their entitlements a that numerous population of US citizen middle class are simply no longer enough on a world scale.

Robbing from others to entitle yours was the good old days. Indians are running scarce.

Thu, 05/24/2012 - 04:09 | 2458122 gwar5
gwar5's picture

I think you might just have OCD regarding US Citizenisms. : )  Remember, the aristocracies, Rothschilds, and the Eurostyle banking cartel system came from across the pond. The US is just a former colony that got away.

 

But yes, if I understand you correctly, the elites have managed to monetize the middle class. And they've leverage us up, on the backs of expected revenue from our future taxes, to levels that would make Jon Corzine blush.  Their good fortune depends on forcing us to continue to pay the rents on the usury. Good luck with that.

Socialism is the lie of something for nothing used to trap suckers, just like the lies used to trap the Indians, so don't fall for that shit from those Palefaces again.

 

Thu, 05/24/2012 - 06:45 | 2458250 AnAnonymous
AnAnonymous's picture

Ummm, well, it reads that US citizen elite has so much concentrated wealth thanks to US citizenism.

US citizen elite depend on no future payments. They do not care about the debt other than for greed.

So their good fortune does not depend on the US citizen middle class.

The US is just a former colony that got away? That is undue humility.

The US is the first country in the world and possibly in the known universe to have adopted as government for man US citizenism.

The US of A is the mecca of US citizenism, the beacon of the free world, the last hope of humanity.

Dont make it sound like the US is just nothing because it is untrue: the US is exceptional due to the unique experiment they have been running and forced on part of the rest of humanity: US citizenism.

And Indians had to cope with US citizenism. Lies is a generic word. But US citizen lies have this special colour that give them their exceptional value.

Remember, as long as the grass is green...

Thu, 05/24/2012 - 03:11 | 2458073 world_debt_slave
world_debt_slave's picture

Trogan Horse Beware! Not to be confused with Trojan Prophylactics!

Thu, 05/24/2012 - 03:18 | 2458080 diesheepledie
diesheepledie's picture

What are they going to do? Fling yogurt? What is Greek for "Irrelevant"? Get them out of the glorious elite Euro already. Sieg Heil!

Thu, 05/24/2012 - 03:20 | 2458081 AnAnonymous
AnAnonymous's picture

Yes, with the capacity to maintain wealth transfer programs as in the old good times, US citizens are going to face more and more the inherent zero sum game of property.

Quite easy to deny when you are on a robbing streak and distribute land and resources taken from non humans or subhumans.

A bit less easy when the robbing streak is drying out because of lack of material to rob from.

Thu, 05/24/2012 - 04:01 | 2458114 LULZBank
LULZBank's picture

A bit less easy when the robbing streak is drying out because of lack of material to rob from.

The "lack of material to rob from" is soon changing into protecting and safeguarding what has already been robbed and keepign control over it, whilst avoiding the angry masses turning against the robbers.

The War on Terror against fictional characters was launched for a reason.

Thu, 05/24/2012 - 08:31 | 2458359 AnAnonymous
AnAnonymous's picture

Perfectly right. Usual development in an expansion scheme.

When appropriating new loot is no longer on the table because of lack of availability of loot, it remains securizing the already amassed loot.

A game changer.

Thu, 05/24/2012 - 03:32 | 2458088 AnAnonymous
AnAnonymous's picture

By the way, classical economics? What is that relatively to voodoo economics? What is the link between the two?

Thu, 05/24/2012 - 03:40 | 2458100 ffart
ffart's picture

Classical economics are what Keynesians call economics that are based on logic and reason and can regress to the most simple case involving one person. Voodoo economics is what everyone else calls Keynesian economics. Kind of like how Capitalism is a term coined by Marxists to describe anyone who wouldn't exist in their moneyless, wealthless society but ended up being adopted by the broaded population.

Thu, 05/24/2012 - 08:33 | 2458362 AnAnonymous
AnAnonymous's picture

Ah, thanks. So basically, it is another subset of US citizen economics.

Which explains why it has some basics that wrong.

Thu, 05/24/2012 - 03:42 | 2458102 Yen Cross
Yen Cross's picture

 Worthless M/E petrodollar rebalancing. Last gasp of the euro wind-down! The Saudies are rinse washing into (usd) instead of euros.

  Makes sense. Crude is priced in usd, and the euro is tanking. The ME's should have finished diversifying 2 weeks ago!

Thu, 05/24/2012 - 03:51 | 2458108 savagegoose
savagegoose's picture

hey u gwt that deal, $1 out of every $100 already.  just open a trade account with ..... fill in the blank.

Thu, 05/24/2012 - 03:58 | 2458112 LULZBank
LULZBank's picture

the person proposing the split needs to offer up at least 20%, and usually closer to 50%, to have a change of seeing their offer accepted

Very interesting read, but the study fails to take into account the other extreme.

What if the person proposing the split is "has low self worth" or a "weak hand" and the person who has to accept the offer is "not normal" or say even suicidal?

Knowing he has the equal leverage in the offer being binding due to his acceptance and actually expects more than 50%, say 60% to 80% being offered for his acceptance?

Bringing in the "fairness" aspect, could be more likely so, as he can also expect to be made whole for the past "unfairnesses" and would not settle for less than 60%-70%?

The accepting person can even, in classical economics terms, play the reverse of that psychology and make the person making the offer, to offer $99 out of the pot of $100 so the person offering can get the $1.

Thu, 05/24/2012 - 04:02 | 2458115 Yen Cross
Yen Cross's picture

 An 80 pip move in aud/usd on a piece of shit German News, It was already priced in! Fucking leeches/stop hunting douche bags!

Thu, 05/24/2012 - 04:06 | 2458120 wretch
wretch's picture

Dive, EUR, dive!  Eurozone PMI falls to 45 on expected 46.  EUR/USD now at 1.2530

Thu, 05/24/2012 - 04:09 | 2458123 Yen Cross
Yen Cross's picture

Look @ eur/aud. It's starting to diverge. They( real money), are starting to cover the hedge. The aud is starting to diverge from the euro. Just like before last fall.

Thu, 05/24/2012 - 04:19 | 2458129 Yen Cross
Yen Cross's picture

All this parabolic $ (DXY) buying is just " Stealth OIS" @ 10 basis points! It's alpha lending in our faces!

Thu, 05/24/2012 - 04:22 | 2458131 skistroni
skistroni's picture

This is an analysis very close to the truth, but you also need to take into account the problem of being short-sighted.

In an Ultimatum Game, the story is over after the game is over. I won X dollars, great. I lost X dollars, what the heck, I don't mind.

In the Greek tug-of-war, the story continues after a decision is made either way. We will have to live our lives and grow our children with the consequences of that decision. 

So, I do concur that most Greeks will look at the problem in the way of an Ultimatum Game, but it is a terribly oversimplified view and the possibilities that it will lead to a destructive (in the long term) decision are many. 

Thu, 05/24/2012 - 04:38 | 2458140 wretch
wretch's picture

Oversimplification?  A good game theorist would call it coarse-graining, then inform you that your so-called "consequences" belong to another field called chaos theory.

Thu, 05/24/2012 - 04:58 | 2458134 CrashX
CrashX's picture

Uhm... to be fair, I'll settle for 80% - as 20% seems a proper "tip", given the ultimatum.

Anyone interested in playing the game - please contact me ASAP. I'll get drunk, jacked up on testosterone, whatever it takes.

Thu, 05/24/2012 - 04:34 | 2458136 delacroix
delacroix's picture

how can greece be broke, didn't they just buy some german submarines?

Thu, 05/24/2012 - 07:34 | 2458296 RECISION
RECISION's picture

Very good  :-)

Thu, 05/24/2012 - 04:53 | 2458164 MeanReversion
MeanReversion's picture

This article is superb.  The Greek crisis is the paradigm of game theory.

Thu, 05/24/2012 - 05:07 | 2458171 Alejandrito
Alejandrito's picture

My view of this situation. There are only 2 opitions.

http://agstock.blogspot.com.es/2012/05/reality-of-eu.html

 

 

Thu, 05/24/2012 - 06:26 | 2458227 I am Jobe
I am Jobe's picture

USSA written all over. Pretending for 3 + years ainlt going to do shit. Stop the welfare crap, enough already.

Thu, 05/24/2012 - 07:31 | 2458295 RECISION
RECISION's picture

Which welfare crap are we talking about here...?

Like - unemployment benefits?

Or - subsidies and bailouts to farmers and bankers?

Thu, 05/24/2012 - 06:40 | 2458242 HungrySeagull
HungrySeagull's picture

Never work for a Greek Boss.

Thu, 05/24/2012 - 06:48 | 2458255 Miss Expectations
Miss Expectations's picture

Let's say there is a concentration camp where  all the the prisoners are being held until they are gassed and burned in ovens.  The camp has 2000 prisoners and 5 watch towers with 2 machine gun wielding guards.  None of the prisoners organize to overtake the guards.  Do they overtake the guards if there are only 4 watch towers?  3 watch towers?  1 watch tower?

 

In the The Ultimatum Game, what if the person making the proposed split is Lucifer himself, you know all red with a tail and horns and smiley about the deal he is offering?

 

 

Thu, 05/24/2012 - 07:28 | 2458287 RECISION
RECISION's picture

And since humans react the same everywhere around the globe when it comes to the Ultimatum Game, the lessons of that study are just as relevant in Athens, Georgia as Athens, Greece.   The upcoming U.S. presidential election will certainly prove that.  

Well right there, is a slam dunk prescription for any opposition Party in the world then.

Demonstrate how the incumbent government is giving money to an elite minority, and how totally unfair it is, and you have your electoral success in the bag.

Stay on message, don't talk about anything else, hammer how unfair it is, ...done deal.

Thu, 05/24/2012 - 08:37 | 2458375 GeezerGeek
GeezerGeek's picture

The sheeple in the US are not good at this game. Ben prints $1 trillion and gives it to the bankers to share with the sheeple. The sheeple settle for maybe 5% under the guise of SNAP, unemployment benefits, the promise of future 'free' healthcare, and so on. The banksters smile, keeping their 95%. The sheeple praise the Messiah and big government. Until they decide they should be getting 7%, not 5%, and look for a different sugar daddy. Banksters still smile, even at 93%.

 

Thu, 05/24/2012 - 10:03 | 2458645 RiverRoad
RiverRoad's picture

Beware of Greeks accepting gifts.

Do NOT follow this link or you will be banned from the site!