NCPA - National Center for Policy Analysis


June 14, 2005

Like humans, monkeys respond to economic incentives, says behavioral economist Keith Chen (Yale University School of Management). Moreover, the data generated by the monkeys makes them statistically indistinguishable from most stock-market investors.

Chen's initial monkey experiments concerned altruism, where two monkeys faced each other in adjoining cages, each equipped with a lever that would release a marshmallow into the other monkey's cage. The only way for one monkey to get a marshmallow was for the other monkey to pull its lever, which to some degree is an act of altruism, or at least, an act of strategic cooperation.

  • At first, the monkeys were fairly cooperative, but they still showed a healthy amount of self interest, typically pulling the lever about 40 percent of the time.
  • Then, one monkey was conditioned to always pull the lever and she blithely pulled her lever over and over; however, once the other monkeys figured out she was a pushover, their rate of reciprocation in pulling their own levers dropped from 50 percent to 30 percent, lower than the original average rate.
  • Meanwhile, another monkey was conditioned to never pull the lever, and once her reputation was established, whenever she was led into the experimenting chamber, the other monkeys became irate.

With such fascinating results, Chen continued his research and taught seven capuchin monkeys the concept of money. From several different experiments Chen found the monkeys grasped the concept of budgeting and adhered to the rules of utility maximization and price theory.

After several other experiments, Chen concluded that the capuchins actually understand money based on these facts: When taught to use money, a group of capuchin monkeys responded quite rationally to simple incentive. However, they responded irrationally to risky gambles: they failed to save, stole when they could, used money for food, and on occasion, paid for sex.

Source: Stephen J. Dubner and Steven D. Levitt, "Monkey Business: Can Capuchins Understand Money?" New York Times Magazine, June 5, 2005.


Browse more articles on Economic Issues