March 21, 2006
From the desk of Jane Galt:Cool economic idea of the week
While some try to surmount or cope with irrationality, others feed upon it. In the wake of the 9/11 attacks, Edward Glaeser began using behavioral economic approaches to research the causes of group hatred that could motivate murderous acts of that type. "An economist's definition of hatred," he says, "is the willingness to pay a price to inflict harm on others." In laboratory settings, social scientists have observed subjects playing the "ultimatum game," in which, say, with a total kitty of $10, Player A offers to split the cash with player B. If B accepts A's offer, they divide the money accordingly, but if B rejects A's offer, both players get nothing. "In thousands of trials around the world, with different stakes, people reject offers of 30 percent [$3 in our example] or less," says Glaeser. "So typically, people offer 40 or 50 percent. But a conventional economic model would say that B should accept a split of even one cent versus $9.99, since you are still better off with a penny than nothing." (If a computer, rather than a human, does the initial split, player B is much more likely to accept an unfair split—a confirmation of research conducted by professors at the Kennedy School of Government. . .)Clearly, the B player is willing to suffer financial loss in order to take revenge on an A player who is acting unfairly. "You don't poke around in the dark recesses of human behavior and not find vengeance," Glaeser says. "It's pretty hard to find a case of murder and not find vengeance at the root of it."
The psychological literature, he found, defines hatred as an emotional response we have to threats to our survival or reproduction. "It's related to the belief that the object of hatred has been guilty of atrocities in the past and will be guilty of them in the future," he says. "Economists have nothing to tell psychologists about why individuals hate. But group-level hatred has its own logic that always involves stories about atrocities. These stories are frequently false. As [Nazi propagandist Joseph] Goebbels said, hatred requires repetition, not truth, to be effective.
"You have to investigate the supply of hatred," Glaeser continues. "Who has the incentive and the ability to induce group hatred? This pushes us toward the crux of the model: politicians or anyone else will supply hatred when hatred is a complement to their policies." Glaeser searched back issues of the Atlanta Constitution from 1875 to 1925, counting stories that contained the keywords "Negro + rape" or "Negro + murder." He found a time-series that closely matched that for lynchings described by historian C. Vann Woodward: rising from 1875 until 1890, reaching a plateau from 1890 until 1910, then declining after 1910.
In the 1880s and 1890s, Glaeser explains, the southern Populist Party favored large-scale redistribution of wealth from the rich to the poor, and got substantial support from African Americans. "Wealthier Southern conservatives struck back, using race hatred" and spreading untrue stories about atrocities perpetrated by blacks, Glaeser says. " 'Populists are friends of blacks, and blacks are dangerous and hateful,' was the message—instead of being supported, [blacks] should be sequestered and have their resources reduced. [Rich whites] sold this to poor white voters, winning votes and elections. Eventually the Populists gave in and decided they were better off switching their appeal to poor, racist whites. They felt it was better to switch policies than try to change voters' opinions. The stories--all about rape and murder--were coming from suppliers who were external to poor whites."
Glaeser applies this model to anti-American hatred, which, in degree, "is not particularly correlated with places that the United States has helped or done harm to," he says. "France hates America more than Vietnam does." Instead, he explains, it has much to do with "political entrepreneurs who spread stories about past and future American crimes. Some place may have a leader who has a working relationship with the United States. Enemies of the leader offer an alternative policy: completely break with the United States and Israel, and attack them. We saw it in the religious enemies of the shah [of Iran]. The ayatollah sought to discredit the secular modernists through the use of anti-American hatred."
For Glaeser, behavioral economics can take "something we have from psychology--hatred as a hormonal response to threats--and put this in a market setting. What are the incentives that will increase the supply of hatred in a specific setting?" Economists, he feels, can take human tendencies rooted in hormones, evolution, and the stable features of social psychology, and analyze how they will play out in large collectivities. "Much of psychology shows the enormous sensitivity of humans to social influence," Glaeser says. "The Milgram and Zimbardo experiments [on obedience to authority and adaptation to the role of prison guard] show that humans can behave brutally. But that doesn't explain why Nazism happened in Germany and not England."
Update: My co-blogger also posted on this article on his own blog.
I've always found Ultimatum Game research to be interesting, but I'm not sure how much validity it has. Studies typically show a decreased desire for vengence as the amount of money at stake increases, and studies funding truly significant amounts of money haven't (for practical reasons) been done. For example, suppose a million dollars was being split by ultimatum. Who here would reject an offer of $10,000? I certainly wouldn't, even though that's 99:1 split. Who would reject the 999:1 split of $999,000,000 versus $1 million?
Posted by: Dan on March 21, 2006 10:16 PMDan,
Don't you think that's a good thing though? Splitting $10 is one thing, but it would be hard to think that people would value thier hatred of someone more than $10,000.
Posted by: Chris on March 22, 2006 02:14 AMAs much as I generally deplore the reality shows on TV these days, I'm a little interested in the coming show entitled "Ultimatum." In the show, $1.5 million is the prize, but a group of people have to all agree to give it to one in the group. As it takes time to reach agreement, the amount decreases.
While its not a perfect replica of the game, it will show much of this in action on TV and might prove somewhat interesting.
Posted by: Craig on March 22, 2006 09:19 AMI don't see the rejection of the deal in the "Ultimatum" game being about hatred at all. I think that there are two reasons why player A offers player B 40% or more (when he/she does):
1) a sense of fairness,
2) knowing that B will likely reject the offer otherwise.
And I think #2 plays a role in reinforcing #1. "Evolution of Cooperation" is a great book on the topic. The basic idea is that when people are likely to interact over and over again (which communally we do) the prisoner's dilemma takes on a new dimension, and it makes sense to "punish" people for bad behavior.
Posted by: Jim Clay on March 22, 2006 11:09 AMI was making a similar point yesterday about why I used to be a proponent of McCain-Feingoldish campaign reform, but have soured on it:
Traditional special interests have positive self-interest. They're rational, and can be negotiated with and reasoned with. The forces that have gained power in the last few cycles -- the psychos from Kos and LGF -- are invested emotionally, not financially. The result is that they're less interested in gaining, or even in not losing, than in doing damage to the other side.
You see this in how the Democrats' proudest accomplishment now is when Bush's poll numbers go down, like it's some sort of inverse GNP for them. Never mind that he's not running for anything, or that they have no interest in using this window of opportunity to accomplish anything on their own agenda.
Posted by: JSinger on March 22, 2006 11:28 AMDon't you think that's a good thing though? Splitting $10 is one thing, but it would be hard to think that people would value thier hatred of someone more than $10,000.
And here I was going to suggest that it means, human beings are petty creatures.
Every now and then somebody commits a felony for reasons of vengeance, but how many bitter office-politics fights and family feuds persist over very small matters, simply because one or both parties feels that resolution would be a threat to ego gratification?
Or, in shorter words: I won't let him/her 'win' this one.
Posted by: anony-mouse on March 22, 2006 01:57 PMThe "ultimate game" demonstrates nothing except the truth that PhD does indeed stand for Piled Higher and Deeper.
Suppose the game took place in a country where murder was permitted (such as today's Palestine) and we added the rule that any player who got no money would be killed immediately and that this promise was kept. I am certain every deal would be accepted unless one of the players was suicidal or had very powerful friends who would quickly kill the testers in revenge.
In other words the outcome of the game is always determined by unmeasurable, uncontrollable exogenous variables.
Posted by: w sol vason on March 22, 2006 03:28 PMSuppose the game took place in a country where murder was permitted (such as today's Palestine) and we added the rule that any player who got no money would be killed immediately and that this promise was kept. I am certain every deal would be accepted unless one of the players was suicidal or had very powerful friends who would quickly kill the testers in revenge.
In other words the outcome of the game is always determined by unmeasurable, uncontrollable exogenous variables.
I don't think your conclusion is warranted by your expanded experiment. You are simply upping the price of refusing the deal. How is that unmeasurable?
You might just as easily say that any player who did not earn some money from the game would be fined $100, and get the same result.
That doesn't invalidate the experiment in any way - you have pushed the price of revenge higher than people were willing to pay. But the initial experiment acknowledged that there was such a line as well: "In thousands of trials around the world, with different stakes, people reject offers of 30 percent [$3 in our example] or less," says Glaeser. You can introduce added costs or benefits to move that line around, but the fact is that people will injure themselves in order to prevent someone from wronging them with impunity. That is the point of the experiment.
Posted by: Bombadil on March 22, 2006 03:53 PMYou have had some interesting behavioral experiments discussed. The last on the removal of 'police' monkeys from a colony and its effect on increasing isolation of the members seems similar enough to this, yet the interpretations in the 2 experiments seem at too great a variance. Given the perspective of the value of the 'police' monkeys on maintaining social cohesion, one could say that the insistence on at least a 60/40 split represents the integration of a 'police' function typically in individuals rather than an example of hatred. The historical reflection on race relations in the South is interesting but presumes that all property is really held in common conceding the view of the 'populists.' That is just one of the problems relating it to this 'game.'
Posted by: michael on March 22, 2006 08:27 PMImmeasurable exogenous variables invalidate this experiment.
First, I infer from the description provided that there is only one event consisting of one offer and one response which may be either "I accept" or "I reject". No other communication (verbal, visual, aural, tactile, or psychic) is allowed. There are no follow-up offers. Each pair of subjects play only once.
The experiment is based on the axiom: "A person behaves irrationally if he/she turns down free money."
The hypothesis is: "People will behave irrationally if their share of a prize is alot less than half."
Here are 3 cases where "irrational" behavior is rational. There are many of these special cases because the subjects bring a lot of baggage to the experiment that prevents them from evaluating offers strictly on a monetary basis.
The experiment assumes a subject will compromise his/her personal values for a trivial sum of money. If a person believes strongly in "equality", that person can neither make nor accept an unjustifiably unequal distribution of a trivial sum of money.
If one opponent comes from a substantially lower caste than the other, both players will agree the $10 must go entirely to the upper caste or to no one. The upper caste may distribute largess to the lower caste but its right to the entire $10 must be recognized. An upper caste cannot accept any gift from a very low caste although it may accept tribute. To accept anything else threatens the caste based social structure.
Perhaps one of the opponents commutes to work by swimming the Rio Grande and the other works for INS. Is a $9.99 offer to an INS agent a bribe? Is 50-50 split a bribe? A $.01 offer is an insult. In this case INS can only refuse all offers. Making an offer to an illegal is illegal.
Please note these examples show rational reasons for turning down free money and that hatred is not a factor. Also these examples reflect the values of well over 1 billion people.
Perhaps one of the opponents commutes to work by swimming the Rio Grande and the other works for INS. Is a $9.99 offer to an INS agent a bribe? Is 50-50 split a bribe? A $.01 offer is an insult. In this case INS can only refuse all offers. Making an offer to an illegal is illegal.
Except, a moment ago, you premised the rules of the game upon this:
First, I infer from the description provided that there is only one event consisting of one offer and one response which may be either "I accept" or "I reject". No other communication (verbal, visual, aural, tactile, or psychic) is allowed. There are no follow-up offers. Each pair of subjects play only once.
Assuming these criteria, and assuming they are controlled to the greatest degree possible (e.g. no workplace uniforms permitted), how could one participant possibly know any of this about the other? Moreover, how is it you assume that most people who must obey certain rules of conduct in professional capacity, will enforce the same rules under circumstances where said rules are entirely irrelevant? Most people mature beyond black-and-white modes of thinking in their late teenage years.
The caste relationship is at least plausible, because caste markings or general manner of dress are often visible, but these, too, can be controlled for. Participants must simply be drawn from the same social caste. And your first case, the equality deontologist, is easily reduced in relevance by making the sample size very large.
I think your search for examples of exogneous variables is not fulfilled by any of these.
Posted by: anony-mouse on March 23, 2006 08:32 PMPeople who commute by swimming the Rio Grande tend to be both paranoid and desperate enough for easy money to participate in this sort of game. INS agents know this and hang around these games for the same reason that vice cops hang around playgrounds. The people who run these games are so comfortable in their intellectual superiority that they miss all the fun. One doesn't need a uniform to spot a cop or wet hair to spot a commuter.
Here are some other attitudes governing game play when the prize is trivial:
1. Some people are extremely competitive and will never accept coming in second.
2. Psych games are a great place to meet girls or guys. Let them win but not by too much. 60-40 is about right. Then strike up a coversation.
Posted by: w sol vason on March 26, 2006 02:20 AMPeople who commute by swimming the Rio Grande tend to be both paranoid and desperate enough for easy money to participate in this sort of game. INS agents know this and hang around these games for the same reason that vice cops hang around playgrounds. The people who run these games are so comfortable in their intellectual superiority that they miss all the fun. One doesn't need a uniform to spot a cop or wet hair to spot a commuter.
But you still haven't cited any evidence that separates these claims from conjecture. Have you actively witnessed the unintended corruption of such a study throught this kind of behavior (and if so, which study and when/where?); or are you simply exercising literary license here?
Posted by: anony-mouse on March 26, 2006 05:10 PMComments are Closed.