From: Michael Nielsen <nielsen@physics.uq.edu.au>
---------- Forwarded message ----------
Date: Wed, 27 Sep 2000 09:47:42 +1000 (EST)
From: Janet Wiles <janetw@csee.uq.edu.au>
To: Festival of Doubt <neurochat@nucleus.elec.uq.edu.au>
Subject: [evol-psych] Cashing in on biology (fwd)
For Fod members at the Luke's Bluff retreat who are still wondering about
that chocolate game....
-Janet
----------------------
http://www.guardianunlimited.co.uk/Archive/Article/0,4273,4054474,00.html
Cashing in on biology Money problems? Blame evolution, says John L Casti.
Some economic strategies are hard-wired
John L Casti
Guardian
Thursday August 24, 2000
How do our concepts of economic exchange arise out of our evolved brain?
Hard-core economists would argue that we are all ultra-rational profit
maximisers, each out to get as much as we can with the minimal investment
of resources. But in such a world of egoists, how can it be that
cooperation ever comes about? Are there good evolutionary reasons for the
behaviour we see every day, in which people forego selfish profits in
favour of altruistic acts of charity?
According to the evolutionary biologist John Maynard Smith of Sussex
University, several major evolutionary transitions have occurred, each one
leading to a stunning biological breakthrough. Economic concepts make
their appearance in many of these long-ago transitions. For instance,
cooperation is found in co-evolving viruses, division of labour appears in
the form of cellular differentiation, and communication occurs in chemical
signalling.
Language and emotions are two central prerequisites for human economic
transac tions. Homo economicus, the mythical rational utility maximiser,
has been unmasked by experimental economist Ernst Fehr of the University
of Zurich.
Fehr demonstrated how cooperation emerges among humans using The Public
Goods game, which illustrates how self-interest hampers economic exchange.
The game involves four players, each given #10 by an experimenter, and
asked to independently invest any part of this money into a common pool.
The experimenter then adds a similar amount to the pool and it is divided
equally among the four participants. So if all four invest their total
fortune they can each double their money.
But there is a very high temptation to freeload, since if one person
invests nothing, while the others invest their total fortune, each
contributor will receive #15, including the one who invested nothing. If
this game is repeated, the players quickly learn to contribute very
little, leading to minimal earnings.
The game changes dramatically, though, if at the end of each round the
players have the option of punishing any player by imposing a fine. This
is economically irrational, as the fines return to the experimenter, not
to the punisher. The rules actually require that punishers have to pay
half as much as the fine they impose (rather like informers to the tax
authorities, who have their own tax return audited).
Nevertheless, the tendency to impose this kind of costly punishment is
widespread, and has a very beneficial effect: players invest for fear of
being punished.
It is economic ties more than genetic ones that underpin human
interactions. The division of labour, cooperation, and the exchange of
goods and services take place between unrelated individuals all the time.
The principal force driving these interactions is what biologists term
'reciprocal altruism': I help you today because I expect you will help me
tomorrow. However, this is direct reciprocation.
In modern economies the link between donor and recipient is broken. Why
bother to redress wrongs directed against third parties? The work of
Manfred Milinski at the Max-Planck Institute in Ploen, Germany, offers
insight into how this form of indirect altruism stems from the world of
biology through the mechanisms of reputation and status.
In Milinski's experiment, players interacted in pairs, each having the
chance to perform an act of altruism or to be selfish and not do so. Each
individual had a score, which rose if a player performed an altruistic act
and fell in they did not.
In a social group, those who are discriminating in their choice of
strategies soon channel help to individuals with high scores. The
assumption is that such help provides recipients with a benefit - four
Swiss francs in the experiment - but at a cost to the donor - one or two
Swiss francs.
When the number of rounds of play was not known before the experiment
began, and the number of players was large so that no two players were
likely to encounter each other twice, the results were clear. Helping
behaviour became widespread, and those who refused to help mostly did so
when the player they were engaging had a low score. This showed that
cooperation can be established as long as players have some way of knowing
the score of whoever they interact with.
The social and economic decisions of real-world humans are determined by a
constellation of feelings and impulses, rather than cold, analytical,
rational calculations. In all cultures there exist similar, and equally
irrational, ideas of fairness. Behaviour deemed unfair inevitably leads to
bitterness, anger, and conflict. Evolutionists convincingly argue that the
capabilities for friendship, gratitude, and empathy are adaptive traits,
since they increase reproductive success under normal social conditions.
These primitive game theories demonstrate how such behavioural strategies
can emerge in a population of competitors. Psychologists have devised
numerous experiments based on these gaming models that show marked,
non-random deviations from the purely rational behaviour espoused by
mainstream economists. These deviations are systematic, indicating that
behaviours such as thinking and feeling are guided by a set of simple,
general, unconscious rules that are probably far more well-adapted to a
hominid household than to a modern market economy. This can be dangerous.
---------- Forwarded message ----------
John L Casti is a member of the faculties of the Santa Fe Institute and
the Technical University of Vienna. His book Paradigms Regained was
published by Little, Brown UK in May 2000
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