Tuesday, August 7, 2012

Why We Punish Cheaters

First, the blog entries will become shorter. While I've made that promise often, it still goes unfulfilled. But now I have a real chance to do that.

Second, this blog is not just going to have rants, although Ross Douthat (here's a really bad one) and David Brooks give me enough material for that. [More on Douthat's profundity later]. No, I'm also aiming to rave about stuff I read and watch, too.

So, while browsing The Economist yesterday, I came across a really interesting article about fairness. I was so excited by this little piece that I just needed to share it all with you {that and it's been a little difficult generating a similar amount of excitement among members of my close social circle; hopefully, this will create some excitement out there that was on par with my keen level of joy}.

So, here it goes. In this article, anonymously written, as is the Economist's style, the author reports on an experiment that two Brits did. Apparently, it's very hard to determine why people choose to punish others for misbehaving. Without doing a giant literature review (and these scientists show how to write a brief and effective one you political scientists should follow), these scientists discuss some possible explanations. Negative emotions that lead people to engage in the costly act of punishing someone could be the result of many causes. First, people can punish others for violating specific norms of cooperation. If a person cheats, that's morally bad, it raises negative emotions, and the cheater is punished. Second, punishment could be weeded out just for retaliation; if you cheat, then I cheat--tit-for-tat. Third, if the cheater's behavior leads to that person to become much better off or the relative position between the two changed as a result, then that person will be punished because the result was "unfair."

So far, it's been really hard to disentangle what motives people have for punishing another because many of these causes are difficult to assess independent of each other. That's where these researchers came in. They set up an experiment. It's based on the "moonlighting game." They use a cool technique called Amazon Mechanical Turk to get subjects that are more diverse than your typical college undergrads at an elite university. With over 500 subjects, they test under what conditions a player will PAY to punish another for "cheating." Without going into the details, they set up three basic scenarios or treatments. In each treatment, Player 2 can cheat and take a certain amount of money away from Player 1. It turns out that Player 1 retaliates or "punishes" Player 2 MOST OFTEN when the results of the cheating produced inequity, i.e., changed the relative position of Player 1 to Player 2. Punishment did NOT happen when someone was left worse off in an absolute sense or just because cheating happened. In other words, punishing the offender happened most often when the first person perceived the result of the other person's behavior as leading to an "unfair result." [Side note--Some people "retaliated" even when no cheating happened; those were the sadists!]

So, these findings are very exciting to me for the following reasons. First, it turns out we don't punish either because a norm was violated, nor out of a simple desire to retaliate [See stupid, ubiquitous IR book by Robert Axelrod every IR grad student is forced to read.] No, human beings go through the messy and complicated analysis, or as the scientists write, "a more cognitively complex task," of determining whether the result was "fair" or not before punishing another. Those crazy humans! [AND, it turns out that ONLY HUMANS do this; other species just retaliate every time.]

So what are some of the implications here? First, apply that to the big banks! We didn't care that they were gaming the system for so long, as long as our financial position relative to them hadn't changed. But if it did, then we get angry! So, yes, President Obama and Elizabeth Warren are right, we're not upset that people are rich, and we're not trying to start a class war. We're out to punish them for cheating, because they've made us all worse off because of their cheating for the last ten years, they've been made a LOT better off as a result, and we will punish them (someday) even if it's expensive to do so.

This also has foreign policy implications. When creating environmental or other types of international agreements, we shouldn't set up agreements that lead to automatic retaliation when cheating is discovered. We should expect that to happen from time to time. When constructing agreements, we don't just need to lay out the conditions for punishment ahead of time. We also need to include a clause in the agreement that says what the consequences will be if the cheating leads to an unfair outcome, i.e., made some party better off than before relative to the other party. If one player thinks that the other player's cheating led to inequitable outcome, then punishment will be dealt.

This means we should just acknowledge that cheating happens all the time when it comes to international agreements, and all the monitoring mechanisms and sanctions threatened may not work to prevent it. And it's really damn costly to set up all of those rules and institutions anyway. Just acknowledge that China/Iran is going to cheat on the agreements it makes. The US should focus on the cases that lead to the change in relative position between the US and China/Iran when deciding to punish. (Q to IR-friends: Does this resurrect that old, stupid debate over absolute vs. relative gains in international cooperation theory and show that those relative gains people are right, sort of?]

There are so many other implications worth discussing.

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