The Lemonade Ultimatum: Game Theory in a Gift Economy

This is part three in our series on behavioral scientists at Burning Man—the temporary society of 70,000 that springs up each summer for a little over a week in the Nevada Desert. Burning Man is defined by the radical norms it promotes, like its gift economy. It’s one giant social experiment—candy for the curious behavioral scientist. In part one, Caroline Webb tells the story of how she tried to bring Burning Man’s 10 Principles home. In part two, Kristen Berman, discusses the pressure to keep up with the Joneses at Burning Man—for the collective benefit.

Each year for Burning Man, tens of thousands descend on the desert to form an experimental city unlike any other place on Earth. The Ten Principles of Burning Man, which include radical inclusion, gifting, and civic responsibility, and the way these principles are manifest through the collective’s contributions of art, performance, and shared survival, enable what is often described as a “transformative effect” for those that experience the Burn.

It is not just attendees that tout the transformative potential; researchers and ethnographers have articulated how the unique social and economic realities at play on the playa can shift the way people relate to one another.

The existence of such a unique environment raises many questions of interest to those that seek to understand, and change, human behavior at large. For one, under this new economic and social reality, do people truly behave in a way that reflects transformation? What exactly is changing, how is it changing, and what caused that change? How might society, if this transformative effect is real and understood, distill and deploy these mechanisms of change in a way that can improve our schools, communities, and companies?

Under this new economic and social reality, do people truly behave in a way that reflects transformation?

In preparing for my first year at Burning Man in 2014, I experienced many of the same concerns that other Burners do: what could be my gift? Survival gear items like lip balm and eye drops, artistic creations like jewelry, or larger gifts like building an art car were not the right contributions for me. After much deliberation, I realized the thing that I have to offer is science. I make my living by studying and changing human behavior. As both a Burner and a behavioral scientist, I could not resist the chance to take a small step toward addressing some of these questions in an empirical way. I decided to take on the question of how people responded to a very unfair offer, to get a sense of whether altruism and tolerance of selfishness might form a part of the transformation so often described in anecdotes and qualitative analyses about Burning Man.

To do so, my colleague and fellow Burner Dan Ariely and I developed a modified version of the ultimatum game, a well-known economic game developed in the early 1980s. It was devised to help uncover the ways people will deviate from choices which maximize their economic benefit if they perceive the offer is unfair, and has since been the subject of extensive empirical research. The standard variation of the game includes a proposer and a responder. The proposer is given an amount of money, which in turn they must offer some percentage of to the other participant (the responder). The responder can choose to accept the offer and both players take home their percentage of the pot, or the responder can reject the offer, leaving both parties empty-handed. Most offers are split equally, or close to equally (50-50; 60-40; 40-60). Fascinatingly, responders will frequently reject offers that are below 20 percent. Rejecting any amount though, is a financially irrational behavior. According to traditional economic thinking, some money is better than nothing, regardless of how much the proposer takes. Several explanations have been posited on why people will reject unfair offers, including retribution against perceived unfairness and an adaptive effort to ensure the maintenance of social norms based on reciprocity.

Dan and I wanted to know whether people behaved differently at Burning Man than those studied in more traditional environments. Per the Burning Man Principles, however, we didn’t want to use any money. After looking into research involving non-human participants where food is often the reward and considering the options that would fit the setting of a temporary city in the middle of the Nevada desert, we settled on icy cold lemonade.

We knew that conducting this field test in the harsh conditions of the desert would be difficult, so we elected to test just one rather extreme condition; the very unfair offer of 10 percent of the lemonade—a mere sip.

Would the transformative nature of the experience inspire more tolerant and accepting responses, or would our results mirror other studies, in which almost everyone ended up with nothing?

With our game set up and our cups poured, we wondered: Would the transformative nature of the experience inspire more tolerant and accepting responses, or would our results mirror other studies, in which almost everyone ended up with nothing?

Instead of the typically high rejection rate, we experienced a significant reversal. Only 16 percent, 12 of our 76 participants, rejected the selfish offer. Participants made comments like: “That’s a very selfish offer, but you can’t choose your gifts,” or “there must be a reason they are being selfish, like, they must be really thirsty”. In some cases, participants asked if they could reach out to the alleged other participant to be able to help them further. We found that people at the event are in fact willing to deviate from retribution to acceptance, and more likely to give other participants the benefit of the doubt.

These results lend support to the notion that Burning Man is a transformative experience, but there are alternative explanations. It could be that self-selection is at play—that the type of people who choose to go to Burning Man are more likely to be forgiving of even wildly selfish offers. It could also be that no matter how much or how little beverage was offered, it was the desert and people had been conditioned to constantly and carefully hydrate, as the Burning Man Survival Guide makes clear. And of course, the conditions didn’t lend themselves to the most rigorous controls. It’s also unclear, whether our accepting participants transferred this behavior, once they made their way back into their everyday lives.

Yet our humble field experiment served a basic purpose: it provided an opportunity to show how interesting social questions can be explored by scientific processes in even the harshest and most dynamic conditions. In particular, it provided preliminary empirical evidence for the intuitive observation that this event can have a transformational effect on behavior.

Behavioral science can and should be employed in places where people have fun, and in particular, places where people are working to build societies with ambitious goals that aim to bring out the best of humanity.

Hopefully more researchers will be inspired to sojourn in the desert or find another norm-bending event to study human behavior in the unique social and economic environment they afford. Scientific processes should not be limited to exploration of interesting questions in the lab, nor just left with policymakers and corporate managers. And on the other hand, lay-persons with interesting intuitions should not be shy about employing social science. It can be used to deepen their understanding of people and can enhance their strategies for social impact. Behavioral science can and should be employed in places where people have fun, and in particular, places where people are working to build societies with ambitious goals that aim to bring out the best of humanity.

Understanding transformation at Burning Man is not only valuable for those interested in Burning Man itself. It can give us insight into the ways that experiencing a new economic reality can engender behavior that deviates, for the better, from what we see in our typical day-to-day lives. It can give us ideas about how collective human experiences, and principles like gifting, can help us achieve our best selves. And, perhaps most importantly, we can find ways to isolate the factors that can lead to transformation and bring them to other diverse institutions and facets of society to help us all realize our potential to be radically inclusive, altruistic, and not just survive, but celebrate.