Crawl Across the Ocean

Wednesday, August 05, 2009

22. Morals by Agreement: Cooperation and Bargaining

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

This is the fourth of what should be a few posts on the book Morals by Agreement, by David Gauthier.


The clip above is 'Opportunities' by the Pet Shop Boys. The chorus says, "I've got the brains, you've got the looks, let's make lots of money" and this is a pretty good summary of chapter 5 of Morals by Agreement.

Of course, in Gauthier's language this translates into, "we become aware of each other as potential co-operators in the production of an increased supply of goods, and this awareness enables us to realize new benefits"

Gauthier's argument is that, given the opportunity to work together to better (or not worsen) their position, people are rational to do so. I agree not to play my tuba late at night and you agree not to mow your lawn early in the morning. Or maybe we form a joint partnership (in order to make lots of money). Or maybe I agree to give you my wallet and you agree not to shoot me*, etc.

Now, I guess to most people it probably seems fairly obvious that people make agreements of this sort all the time and it makes sense to do so, but you have to remember that Gauthier is starting from his notion of the rational human as one that does nothing but maximize its own interest in the present, with no ability to work together with others in a cooperative fashion.

The problem is that, unlike in the perfectly competitive market where people could (per Gauthier's theory) reach optimal outcomes by strictly pursuing maximization of their self-interest, situations where cooperation would be beneficial are situations where the market has 'failed' meaning that simplistic pursuit of self-interest by all parties will lead to sub-optimal solutions because it fails to consider superior 'joint strategies' where the people in a situation choose their strategies together (by bargaining to reach agreement) rather than separately.

You can think of a basketball team that has a better chance of scoring if they follow the play their coach drew up for them than if they all just do their own thing and hope for the best.

Or if we think back to the original Prisoner's Dilemma, if the prisoners were able to make a binding agreement with each other not to confess, then this would open up a new, optimal (from the prisoners' standpoint) solution to their dilemma that was unavailable when they were only able to each maximize their own self-interest.

Gauthier argues that in this context, rational behaviour requires that people agree to constrain their self-interest maximization for a while in order to secure a share of the benefits of cooperation.

Gauthier explains that, in the bargaining phase where the spoils of (the future) cooperation are being divided up, people are still acting to maximize their self-interest as best they can under the circumstances. But the bargain that is reached is an agreement to not maximize self-interest while carrying out the terms of the bargain.

So, I maximize my self interest as I push for the smallest concession possible when agreeing not to play my tuba late at night ('ok, I won't play after midnight, but I won't agree not to play between 11 and midnight' etc.) but when midnight strikes, I go against my self-interest by keeping the terms of the agreement and not just going ahead and playing my tuba anyway.

This question of whether the rational Gauthier people will actually stick to their agreements is one of the stickiest that Gauthier faces and is the subject of chapter 6.

I should also mention that Gauthier spends much of the chapter explaining his bargaining theory that if people have an equal willingness and ability to drive a hard bargain, they will end up making an equal bargain (one where everybody gains a roughly equal share of the spoils of cooperation).

* You might think that the bargain where I give up my wallet in return for my life is not a fair one and should count differently than the others somehow - Gauthier agrees but defers discussion of the bargaining position of the parties until chapter 7

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