Crawl Across the Ocean

Tuesday, April 13, 2010

48. Self-Interest, Weak Reciprocity and Strong Reciprocity

Note: This post is the forty-eighth in a series. Click here for the full listing of the series.

The ideas in this post are generally taken from the book (a collection of essays) 'Moral Sentiments and Material Interests: The Foundation of Cooperation in Economic Life.' (edited by Herbert Gintis, Samuel Bowles, Robert Boyd and Ernst Fehr)

The central theme of the book is the notion of 'strong reciprocity,' but before defining 'strong reciprocity', I should cover the alternatives.

Most economic and biological theory these days starts from a premise that people are self-interested in the sense that given two options they will choose whichever one gives them the highest payout without being concerned about what payments everyone else gets.

The primary support for this viewpoint is the notion that if someone was to sacrifice their own good for someone else's, this would negatively impact their ability to reproduce, so this would not a successful evolutionary strategy - i.e. 'nice guys finish last (in terms of number of descendants with their genes)'

Robert Axelrod is well known for his book, 'The Evolution of Cooperation' in which he invoked 'the shadow of the future' showing that in situations where people were playing a repeated prisoner's dilemma against each other, the most successful strategy was often 'tit-for-tat' - a strategy which involved cooperating in the prisoner's dilemma against people who also cooperated and defecting against people who defect. In the field of biology, Robert Trivers came to a similar conclusion that what looked like altruistic behaviour (e.g. cooperation in a prisoner's dilemma) could actually benefit the person being altruistic, under the right circumstances (i.e. where there might be a later payback to this 'altruism').

The authors of 'Moral Sentiments and Material Interests: The Foundation of Cooperation in Economic Life.' refer to this self-interested cooperation in repeated Prisoner's Dilemmas as 'weak reciprocity' - weak because it is conditional on certain circumstances holding such that a person believes it to be in their long term interest to behave in a cooperative manner.

The book presents results from a number of experiments that demonstrate that, even in situations where people have no reasonable expectation of benefiting from their actions, a significant percentage of the population is predisposed to cooperation (with those who also cooperate) and will go out of their way to punish people who defect. In their words,
"Strong reciprocity is a predisposition to cooperate with others, and to punish (at personal cost, if necessary) those who violate the norms of cooperation, even when it is implausible to expect that these costs will be recovered at a later date."

The authors also address the notion that this behaviour could be 'an error' due to the fact that people just aren't used to dealing with this sort of non-repeated prisoner's dilemma type situation so they behave like strong reciprocators 'by accident'. As the authors note, from the standpoint of predicting behaviour, this is a distinction without a difference. They also note that the behaviour observed is quite stable over time and doesn't seem to go away as people get more and more experience playing the game in the experiments conducted.

One of the examples of an experiment conducted is an 'ultimatum game' where one player offers the second player some portion of $100. The second player can then accept the offer, meaning that the second players gets what was offerred and the first player gets the rest, or reject it, meaning that both players get nothing. The self-interest theory suggests that the first player will offer the most they can while still offering the second player something (e.g. $99) and that the second player will accept this offer (because $1 is better than nothing).

Of course, as you might expect (if you are not an economist!), it turns out that people don't behave that way at all, with $50 being the most common offer, and people frequently rejecting offers that are less than $50, just to punish the first player for the ungenerous offer.

The authors report the results from a cross-cultural study they did of behaviour in the ultimatum game. What they found was that, although none of the 15 societies they studied resembled the 'self-interest' model, there was a wide variety of behaviour patterns, that seemed to vary based on the way that each society operated. For example, in the Lamalera whaling society, the average offer by the first players was 57%, reflecting that when the Lamalera people make a large catch there is a meticulous distribution system set up so that everybody gets a 'fair share'. Meanwhile, the Hazda, a group of small scale foragers, generally made lower offers and had high rejection rates, reflecting the fact that although they did share meat, there was generally a lot of conflict involved in the process (e.g. people trying to hide their catches).

* * *

One of the things the authors (unsurprisingly) don't get into is whether strong reciprocity is more consistent with guardian or commercial type activities. But given that a key component of strong reciprocity is to 'take vengeance' and that it also seems to be connected with solving prisoner's dilemma's and public goods problems and cooperation in large groups, it seems logical that strong reciprocity leans more towards guardian type situations rather than market exchange situations.

Later on in the book, the authors note that strong reciprocity can work to make communities a powerful force, but that it has a negative effect in that the effectiveness of community depends on the ability to include 'us' and exclude 'them' leading to a tendency of communities to 'be exclusive' - a member of the list of guardian ethics. At the same time, the authors note that a weakness of communities is the difficulty with achieving scale of operations, although they do not consider the potential use of hierarchy to overcome this weakness.

* * *

An interesting result of the experiments is that rather than their being a single type of person (as assumed in most models), it seems that people exist along a range - from a sizable portion of the population (~25% in some studies) that does behave like the standard economic model of self-interest suggests, through people who exhibit what seems like weak reciprocity, to a large number of people that exhibit strong reciprocity and even further into a small part of the population which seems to be dedicated cooperators who will cooperate in almost all situations, even when their generosity is being taken advantage of repeatedly (i.e. in terms of the original prisoner's dilemma - they won't rat on their cellmate no matter how many times their cellmate gets off easy by ratting them out.)

Given this heterogeneity in people's dispositions toward cooperation, we can see that it is a tricky problem to design societies and systems which allow the cooperative types to benefit from cooperation without being exploited by the self-interested types.

It reminds of something I've previously quoted from Hans Ritschl's 'Community and Market Economy:'
"This understanding of the fundamental power of the communal spirit leads to a meaningful explanation of coercion in the state economy. Coercion is a means of assuring the full effectiveness of the communal spirit, which is not equally developed in all members of the community. Coercion forces the individual to act as if he were inspired by communal spirit. Coercion is only the outer clasp and fastening of the community, but if communal spirit be lacking, coercion can replace it only in part."

Even more so than usual, I am only scratching the surface of this densely packed book, which I highly recommend to anyone interested in the question of human cooperation.

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