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ScienceWeek
SOCIOLOGY: ON THE BEHAVIOR OF "ECONOMIC MAN"
The following points are made by C.F. Camerer and E. Fehr (Science 2006 311:47):
1) Most economic analyses are built on two major simplifying assumptions about human nature: Individuals are assumed to be rational decision makers and to have purely self-regarding preferences. The modeling of complex social phenomena often involves simplifying assumptions like these; otherwise, models may quickly become mathematically intractable. The rationality assumption consists of two components: first, individuals are assumed to form, on average, correct beliefs about events in their environment and about other people's behavior; second, given their beliefs, individuals choose those actions that best satisfy their preferences.
2) If individuals exhibit, however, systematically biased beliefs about external events or other people's behavior or if they systematically deviate from the action that best satisfies their preferences, we speak of bounded rationality. Preferences are considered to be self-regarding if an individual does not care per se for the outcomes and behaviors of other individuals. Self-regarding preferences may, therefore, be considered to be amoral preferences because a self-regarding person neither likes nor dislikes others' outcomes or behaviors as long as they do not affect his or her economic well-being.
3) In contrast, people with other-regarding preferences value per se the outcomes or behaviors of other persons either positively or negatively. A large body of evidence accumulated over the last three decades shows that many people violate the rationality and preference assumptions [1,2] that are routinely made in economics [3]. Among other things, people frequently do not form rational beliefs, objectively irrelevant contextual details affect their behavior in systematic ways, they prefer to be treated fairly and resist unfair outcomes, and they do not always choose what seems to be in their best interest.
4) It seems obvious that these violations of the rationality and preference assumptions will appear in the behavior of aggregate entities like markets and organizations or in political processes. This view is premature, however, because many experiments also indicate that a share of the subjects do not violate the above assumptions and the existence of these subjects may cause aggregate outcomes to be close to the predictions of a model that assumes that everyone is rational and self-regarding.[3-5]
5) In summary: The canonical model in economics considers people to be rational and self-regarding. However, much evidence challenges this view, raising the question of when "Economic Man" dominates the outcome of social interactions, and when bounded rationality or other-regarding preferences dominate. The authors show that strategic incentives are the key to answering this question. A minority of self-regarding individuals can trigger a "noncooperative" aggregate outcome if their behavior generates incentives for the majority of other-regarding individuals to mimic the minority's behavior. Likewise, a minority of other-regarding individuals can generate a "cooperative" aggregate outcome if their behavior generates incentives for a majority of self-regarding people to behave cooperatively. Similarly, in strategic games, aggregate outcomes can be either far from or close to Nash equilibrium if players with high degrees of strategic thinking mimic or erase the effects of others who do very little strategic thinking. Recently developed theories of other-regarding preferences and bounded rationality explain these findings and provide better predictions of actual aggregate behavior than does traditional economic theory.
References (abridged):
1. D. Kahneman, P. Slovic, A. Tversky, Judgment Under Uncertainty Heuristics and Biases (Cambridge Univ. Press, New York, 1982)
2. C. F. Camerer, Behavioral Game Theory Experiments in Strategic Interaction (Princeton Univ. Press, Princeton, NJ, 2003)
3. In principle, economic methods such as optimization under constraints are strictly neutral with regard to the nature of people's preferences. These methods certainly allow for the formalization of other-regarding motives, but in almost all applications, economists assume that preferences are purely self-regarding
4. H. Gintis, J. Theor. Biol. 206, 169 (2000)
5. E. Fehr, U. Fischbacher, Nature 425, 785 (2003)
Science http://www.sciencemag.org
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SOCIO-ECONOMIC SCIENCE: ON HUMAN ALTRUISM
The following points are made by E. Fehr and U. Fischbacher (Nature 2003 425:785):
1) Human societies represent a huge anomaly in the animal world(1). They are based on a detailed division of labor and cooperation between genetically unrelated individuals in large groups. This is obviously true for modern societies with their large organizations and nation states, but it also holds for hunter-gatherers, who typically have dense networks of exchange relations and practise sophisticated forms of food-sharing, cooperative hunting, and collective warfare(2,3). In contrast, most animal species exhibit little division of labor and cooperation is limited to small groups. Even in other primate societies, cooperation is orders of magnitude less developed than it is among humans, despite the close common ancestry of primates and humans. Exceptions are social insects such as ants and bees, or the naked mole rat; however, cooperation in these species is based on a substantial amount of genetic relatedness.
2) Why are humans so unusual among animals in this respect? The authors propose that quantitatively, and probably even qualitatively, unique patterns of human altruism provide the answer to this question. Human altruism goes far beyond that which has been observed in the animal world. Among animals, fitness-reducing acts that confer fitness benefits on other individuals are largely restricted to kin groups; despite several decades of research, evidence for reciprocal altruism in pair-wise repeated encounters(4,5) remains scarce. Likewise, there is little evidence so far that individual reputation building affects cooperation in animals, which contrasts strongly with what we find in humans. If we randomly pick two human strangers from a modern society and give them the chance to engage in repeated anonymous exchanges in a laboratory experiment, there is a high probability that reciprocally altruistic behavior will emerge spontaneously.
3) However, human altruism extends far beyond reciprocal altruism and reputation-based cooperation, taking the form of strong reciprocity. Strong reciprocity is a combination of altruistic rewarding, which is a predisposition to reward others for cooperative, norm-abiding behaviors, and altruistic punishment, which is a propensity to impose sanctions on others for norm violations. "Strong reciprocators" bear the cost of rewarding or punishing even if they gain no individual economic benefit whatsoever from their acts. In contrast, "reciprocal altruists", as they have been defined in the biological literature(4,5), reward and punish only if this is in their long-term self-interest. Strong reciprocity thus constitutes a powerful incentive for cooperation even in non-repeated interactions and when reputation gains are absent, because strong reciprocators will reward those who cooperate and punish those who defect.
4) In summary: Some of the most fundamental questions concerning our evolutionary origins, our social relations, and the organization of society are centered around issues of altruism and selfishness. Experimental evidence indicates that human altruism is a powerful force and is unique in the animal world. However, there is much individual heterogeneity and the interaction between altruists and selfish individuals is vital to human cooperation. Depending on the environment, a minority of altruists can force a majority of selfish individuals to cooperate or, conversely, a few egoists can induce a large number of altruists to defect. Current gene-based evolutionary theories cannot explain important patterns of human altruism, pointing towards the importance of both theories of cultural evolution as well as theories of gene–culture co-evolution.
References (abridged):
1. Boyd, R. & Richerson, P. The Nature of Cultures (Univ. Chicago Press, Chicago, in the press)
2. Kaplan, H., Hill, J., Lancaster, J. & Hurtado, A. M. A theory of human life history evolution: diet, intelligence, and longevity. Evol. Anthropol. 9, 156-185 (2000)
3. Hill, K. Altruistic cooperation during foraging by the Ache, and the evolved human predisposition to cooperate. Hum. Nat. 13, 105-128 (2002)
4. Trivers, R. L. Evolution of reciprocal altruism. Q. Rev. Biol. 46, 35-57 (1971)
5. Axelrod, R. & Hamilton, W. D. The evolution of cooperation. Science 211, 1390-1396 (1981)
Nature http://www.nature.com/nature
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Notes by ScienceWeek:
In this context, the term "altruism" refers in general to behavior that benefits another individual, usually of the same species, at the expense of the agent. The phenomenon is widespread among various species, and has been interpreted by some as apparently at odds with Darwinian theory. Theories of altruism in biology are often concerned with "cost-benefit" analysis as dictated by the logic of natural selection.
The term "Hamilton's rule" refers to the prediction that genetically determined behavior that benefits another organism, but at some cost to the agent responsible, will spread by natural selection when the relation (rb-c} > 0 is satisfied, where (r) is the degree of relatedness between agent and recipient, (b) is the improvement of individual fitness of the recipient caused by the behavior, and (c) is the cost of the agent's individual fitness as a result of the behavior. The rule was first proposed by William D. Hamilton (1936-2000), and Hamilton's theory is often referred to as "kin selection". As an example: A mutation that affected the behavior of a sterile worker bee so that she fed her fertile queen but starved herself would increase the inclusive fitness of that worker because, while her own fitness decreased, her actions increased the fitness of a close relative.
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ON NATURAL SELECTION, KIN SELECTION, AND ALTRUISM
The following points are made by Mark Ridley (citation below):
1) Natural selection working on groups of close genetic relatives is called kin selection. In species in which individuals sometimes meet one another, such as in social groups, individuals may be able to influence each other's reproduction. Biologists call a behavior pattern altruistic if it increases the number of offspring produced by the recipient and decreases that of the altruist. (Notice that the term in biology, unlike in human action, implies nothing about the altruist's intentions: it is a motive-free account of reproductive consequences.) Can natural selection ever favor altruistic actions that decrease the reproduction of the actor? If we take a strictly organismic view of natural selection, it would seem to be impossible. Yet, as a growing list of natural observations records, animals behave in an apparently altruistic manner. The altruism of the sterile 'workers' in such insects as ants and bees is one undoubted example. In such cases, the altruism is extreme, as the workers do not reproduce in some species.
2) Altruistic behavior often takes place between genetic relatives, where it is most likely explained by the theory of kin selection. Let us suppose for simplicity that we have two types of organism, altruistic and selfish. A hypothetical example might be that, when someone is drowning, an altruist would jump in and try and save him or her, whereas the selfish individual would not. The altruistic act decreases the altruist's chance of survival by some amount which we call c (for cost), because the altruist runs some risk of drowning. The action increases the chance of survival of the recipient by an amount b (for benefit). If the altruists dispensed their aid indiscriminately to other individuals, benefits will be received by other altruists and by selfish individuals in the same proportion as they exist in the population. Natural selection will then favor the selfish types, because they receive the benefits but do not pay the costs.
3) For altruism to evolve, it must be directed preferentially to other altruists. Suppose that acts of altruism were initially given only to other altruists. In such a case, what would be the condition for natural selection to favor altruism? The answer is that the altruism must take place only in circumstances in which the benefit to the recipient exceeds the cost to the altruist. This relation will hold true if the altruist is a better swimmer than the recipient, but it does not logically have to be true (if, for instance, the altruist were a poor swimmer and the recipients were capable of looking after themselves, the net result of the altruist's heroic plunge into the water might merely be that the altruist would drown). If the recipient's benefit exceeds the altruist's cost, then a net increase occurs in the average fitness of the altruistic types as a whole. This condition has only theoretical interest. In practice, it is usually (maybe always) impossible for altruism to be directed only to other altruists, because they cannot be recognized with certainty. It may be possible, however, for altruism to be directed at a class of individuals that contains a disproportionate number of altruists relative to their frequency in the population. For example, altruism may be directed toward genetic relatives. In this case, if a gene for altruism appears in an individual, it is also likely to be in its relatives.
Adapted from: Mark Ridley: Evolution. 2nd Edition. Blackwell Science 1996, p.321. More information at: http://www.amazon.com/exec/obidos/ASIN/0632043849/scienceweek
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