Happiness is Relative?

There is a game that economist play where they provide $100 for splitting between two people. The game is they give the $100 to one person who is in control of how to split the money. If his offer is rejected by the second person then neither one of them get anything. If you were the one given the ability to determine the split then you would come up with some sort of 70-30. But that isn’t optimal. The optimal split is 99-1. This is optimal because player 2 would still receive something and something is better than nothing. But human behavior doesn’t work that way. If the second person believes that player 1 is being unfair then player 2 will sacrifice their gains to punish player 1 for offering such a poor deal. As the game plays out, player 1 knows this and tries to find the best balance. It usually turns out somewhere near 70-30.

But now science has shown that the brain responds specifically to how a person feels they are rewarded compared to their neighbor. Time.com is running an article titled Success Depends on Others Failing that explains how this is true. So if you fail at something, but your neighbors fail worse, then you are less unhappy about your situation. The flipside goes for achievement.

I see it all the time in golf. If all four players perform badly, then not one of them is overly upset with their score. But if three of them play well and one doesn’t, there is usually a frustrated player.

What is most interesting is that the negative feelings are much more disruptive to behavior and performance than positive, or outperforming feelings. For instance, if someone doesn’t have concrete pay performance parameters then it is in the best interest of the company to compensate this person only slightly behind their peers. If the company doesn’t then they run the risk of lost motivation and performance deterioration. It is probably worth keeping the person close in range for that reason alone.

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