Social Econ Blog

Mark Thoma points to a couple of interesting articles on trust and fairness.

First, some neuroeconomists ran trust games while monitoring brain hormones:

... In neuroeconomics experiments that my lab has conducted, we have found that when a stranger places trust in another by making a considered monetary investment that can either be returned or stolen, our brains release an ancient mammalian hormone called oxytocin.

Oxytocin is what bonds mammals to their offspring, and in humans makes spouses care about and love each other. We have found that trust causes a spike in oxytocin and begets reciprocation - the sharing of money.

We are "wired" to cooperate, and we find it rewarding in the same way that our brains identify eating a good meal ... as rewarding. Oxytocin is active in evolutionarily old areas of our brain, outside of our conscious awareness. We simply have a sense that sharing with someone who has trusted us is the right thing to do.

We have also found that about two percent of undergraduates we studied are pure non-cooperators. When they have an opportunity to share money with a stranger who has trusted him or her, non-cooperators keep all the money rather than share the largess.

The technical term in my lab for these people is "bastards." Our evidence suggests that bastards' brains work differently. Their character traits are similar to those of sociopaths. They simply do not care about others the way most people do, and the dysfunctional processing of oxytocin in their brains appears to be one reason for this. Because bastards are out there, we still need government and personal enforcement of economic exchange.

Many believe that market exchange diminishes our humanity. Think of Charlie Chaplin's film "Modern Times," in which the little tramp is literally a cog in the capitalist machine. That view is wrong. On the contrary, working together, and trading with each other in markets, is morality in action.

Second, we learn that monkeys also get pissed when treated unfairly:

As there is no such thing as a free lunch, Sammy and Bias had to work for theirs. The two capuchin monkeys ... sat in side-by-side cages separated by a mesh barrier while just beyond the bars was a tray holding two cups of food. It was counterweighted so that both monkeys had to pull a bar to haul in lunch, moving the tray snugly against the cage in such a way that Sammy could reach one cup and Bias the other.

But Sammy was in such a hurry to chow down that after grabbing the apple in her cup, she let go of the tray before Bias could dig into her own. The tray snapped out of reach, causing Bias to scream bloody murder. After half a minute, Sammy understood. She reached out for the tray and helped Bias reel it in. Anyone who has been around toddlers will recognize Bias's reaction as a simian, "That's not fair!"

...

Capuchins ... know unfairness when they see it. They prefer grapes to cucumbers, and when a scientist gave a grape to one capuchin and a cucumber to another, the latter threw it onto the ground and stalked away rather than acquiesce to this injustice.

Now, the research is moving from observations to experiments, such as the pull-tray that triggered Bias's tantrum. To test how sensitive capuchins are to inequity, Prof. de Waal and colleagues counterweighted the tray so that it required only one monkey to reel it in. In this case, the monkey almost never shares its apple with the monkey who hasn't helped. No work, no pay is fair.

When pulling the tray requires two monkeys' efforts, but only one cup is filled, the lucky monkey often shares its spoils. "Winners were, in effect, compensating their partners for received assistance," Prof. de Waal writes. It was the fair thing to do.