He can be as selfish or as generous as he likes, with one proviso: if you refuse his offer, neither of you gets any money at all. What would it take for you to turn him down?

This is the scenario known to economists as the ultimatum game. Now the way we play it is generating remarkable insights into how the human brain drives financial decisionmaking, social interactions and even the supremely irrational behaviour of suicide bombers and gangland killers.

According to standard economic theory, you should cheerfully accept anything you are given. People are assumed to be motivated chiefly by rational self-interest, and refusing any offer, however low, is tantamount to cutting off your nose to spite your face.

Yet in practice derisory offers are declined all the time. Indeed, if the sum is less than £2.50, four out of five of us tell the selfish so-and-so to get lost. We get so angry at his deliberate unfairness that we are prepared to incur a cost to ourselves, purely to punish him.

Homo sapiens is clearly not Homo economicus, the ultra-rational being imagined by many professional economists.

An emerging fusion of economics, evolutionary psychology and neuroscience — neuro-economics in the jargon — is now starting to tell us why this is so.

Scientists yesterday published new evidence in the journal Science, showing not only how the brain makes difficult decisions but also that our choices can be changed when a critical part of the brain is switched off with magnets.

The researchers, Ernst Fehr and Daria Knoch, of the University of Zurich, used a technique called transcranial magnetic stimulation to tire out and thus temporarily suppress a part of the brain called the dorsolateral prefrontal cortex (DLPFC). Functional magnetic resonance imaging scans show that this is particularly active when people play the ultimatum game.

When the right DLPFC is shut down, the way they play starts to change. When given a low offer, they still feel it is deeply unfair. But, instead of rejecting it as they usually would, their selfish, ultra-rational side wins out over their emotional reaction against the other player’s meanness. They accept any amount of cash, however small.

The implication is not that the DLPFC is generating a sense of injustice — that was still there even when the region was knocked out. Rather, it seems to be more like an executive decision-maker, balancing the claims of emotion and reason.

“It is as if it is the referee that enforces fairness, and overrides narrow self-interest,” said David Laibson, Professor of Economics at Harvard University.

The results tend to support a very different theory of human behaviour from that favoured by classical economists. Our decisions seem not to be determined mainly by reason, but by a continuous battle between two sides of our psyches that are rooted in different mental circuits.

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