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How we choose is subject several differing rationales. How we exercise choice differs, depending on the nature of the choice itself. Where different mechanisms are in play, mistakes get made. This is a brief note about the progress which is being made in exploring the roots and the implications of this.
Much progress is being made in the field which is becoming known as "experimental economics". Classical economics is, perhaps, chiefly concerned with what people ought to do, as rational agents, and with what they actually do when acting in large numbers. Experimental economics concerns itself with the evidence for the truth of this, and with what happens in the less perfect domain of the individual, the emotional and the specific.
The interesting feature of this discipline is that it uses everything from mathematical game theory to neural imaging to find experimental support for the issues which it tests. For example, Science 300 p 1755 13 June 2003 reports how people's mental processing reacts to economic choice.
The experimental set-up is as follows. A game between two players uses real money, which they retain at the end of the test. A pot of money is to be divided between two players. One of them proposes a division to another: perhaps that they get $4 out of a pot of $10. The proposer keeps the balance. Rejection of this offer leads to neither of them getting any money, whilst acceptance results in the pot of money being divided as agreed.
This game was played with the second player placed in a neural imaging system. This device is able to watch the activation of areas of the brain in near-real time. As the brain is highly specialised, with parts of it performing very specific tasks, this procedure allows the experimenters to follow which parts of the mind are engaged when particular problems are being solved.
The results of the brain imaging shows how the player reacts to various type of offer, and shows that quite distinct parts of the brain are engaged when different kinds of decision are being made. Specifically, there are areas of the brain which are engaged when the issue of the perceived 'fairness' of the division becomes acute.
Game theory suggests that people who play this game should accept any non-zero offer. By contrast, experiment shows that the mean division is around 50/50, and that about half of all low offers are rejected. The regions associated with negative emotions and conflicting emotions both become excited and may over-ride the 'rational' or cortical processing when low offers were made. The experimenters are able to detect a "f*** you" response, with near-complete reliability. The lesson from this is that what we see as a single field - "choosing" - is in fact dissected into quite dissimilar domains, where we exercise choice differently.
To reinforce this point, consider the role of reputation. There is a so-called 'trust' game, which involves putting hidden sums of real money into a pot, which is then equally divided between the players, with an overall premium added to reward strong investment. The game theory equilibrium is to cheat: one should not put any money into the pot, but aim to get something back from the division. In this, it is identical with the "tragedy of the commons" in which it rewards individuals to exploit natural resources and to invest nothing in their upkeep.
As a result, however, most such games peter out after a few rounds, with nobody investing. If, by contrast, the contributions of individuals are made known, then everyone invests to the hilt and the group prospers. Experiments show that occasional exposure is quite enough to keep the game going, particularly if players can choose with whom they play, such that reputation is both a source of information about likely behaviour, and a passport to a high-return world. Fascinating work has been done on the value of reputation, and on the amount of information needed to make a valid decision about participation in such a game.
However, for present purposes, it is worth noting that the development of 'bonding' correlates not only with factual information but also with the levels of the hormone oxytocin in the blood of the individuals, This compound associated with many social processes - such as lactation in female mammals - but is closely linked to the social group formation, trust development, conflict resolution and learning. We find that some of our most important social processes are, therefore, mediated not even by our unconscious minds, but by our deep biochemical plumbing.
Autistic adults, who have difficulties in understanding other peoples' inner lives, behave in trust games just as game theory would suggest. People from small-scale societies do much the same.
It follows that there seem to be four basic (and very different) domains within which we make decisions. None of these are of themselves surprising, but each has different rules of participation and closure. They have to be handled differently. Conflict and mistakes may well arise where we have these categories mixed together, or where one group is acting upon on rationale, whilst another is following a distinct set of processes.
All of these define choice, depending in which domain we are operating. The world is not organised around rationality, but assorted and incompatible rationales. Push a negotiator out of mode one and into mode two and the f*** you syndrome will dominate, even if it costs him or her their job.
Two additional sources of information have recently come to our attention. One relates to an attempt to train a chimpanzee to urinate in a bowl. This was done in classical operant style, by offering a reward when she performed as required. The animal quickly learned the task. However, she also learned that she was rewarded per offering, not by volume. She therefore changed her behaviour to pee frequently and a little rather once, copiously. Any attempt at regulation will be met by arbitrage, it seems.
As a fascinating if faintly disgusting coda, the chimp tried to substitute both water, carried by hand, and her spit for urine when she was completely dried out, showing that she was thinking about the world in categories (liquids, or some such.)
Under the heading "Monkeys reject unequal pay" Brasnan and de Waal have shown (Nature 425 p297-299 2003) that capuchin monkeys possess a sense of what we would call "fairness". Capuchins are a highly cooperative species and frequently share food. The experimenters taught the monkeys to trade grapes for cucumbers. Later, when the idea of exchange was understood, they learned to "buy" the much-favoured grapes from human experimenters using tokens, analogous to money. Pay rates were established, with the monkeys getting tokens for performing a task, which they could then use to buy grapes.
A striking observation was that if one monkey saw another getting more for their token than they themselves did, then they would refuse to work, even at the expense of not getting any grapes at all. Lower-paid animals often rejected their reward altogether, despite the relish that the moneys had for grapes. The underpaid monkeys disrupted the system of work and pay. Tokens were taken and not handed back, thrown to the bottom of the cage or ejected altogether. This did not happen in three years of an equal pay regime, and it was only the low-paid monkeys which reacted in this way.
The experimenters noted that it was not the absolute rates of pay (how many grapes per token) that mattered to the monkeys, but whether they all got the same number of grapes for a token. The authors argue for a universal "sense of fairness" amongst the primates. Dog owners will note a similar phenomenon, as well as jealousy, guilt and other emotions. There is no argument that the higher mammals feel fear, excitement, hunger and other emotions much as we do, so it should come as no surprise that the concomitants of economic life are also shared. The invisible hand is, perhaps, a consequence of our genes, all but 3% of which we share with chimps. However, it does suggest that there may be limits to how far we can manipulate human behaviour, and considerable truth in the idea that things change, but people do not.
Please see here for more on this topic.
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