Tuesday, August 03, 2010
Illusory Superiority and Signalling
My sister is an actress, doing more stage acting and dancing than screen work. My brother is a musician. I dabbled in acting and singing for much of my youth, even heading up the University of Cape Town choir for a while when I was a student. Now why is this relevant? As a consequence of these affiliations and activities I occasionally end up watching programs like So You Think You Can Dance (which my brother-in-law did quite well in previously) and Idols. I explained to my students that these two programs create problems for economists and some of our theory. Why? I shall try to explain below.
Consider signalling theory and let's take the classic example of education. The idea here is that you try to create a set of incentives such that high ability individuals and low ability individuals self-select into groups such that high ability individuals get an education to signal that they are high ability because to get such an education would be too costly for low ability individuals (this is summarizing greatly). What this assumes is that people know their own abilities. But, as Idols and So You Think You Can Dance so readily exemplify, many people do not know that they have low ability. They believe, falsely, that they are high ability individuals. They are victims of illusory superiority..
So, I explained to my students that in the context of Idols and So You Think You Can Dance, that humans are funny creatures. We're subject to all kinds of cognitive biases. One particular bias, appropriate for these programs, is the Dunning-Kruger effect. The Dunning-Kruger effect exemplifies a cognitive bias by which individuals often think that their abilities are better than they are, that is people suffer from illusory superiority. Consider two people: one of low ability, another of high ability. If the Dunning-Kruger effect (and, specifically, illusory superiority for low ability individuals) holds, then the individual with low ability does not realise that they have low ability. This creates a problem for signalling theory. Why? The low ability person will lack the metacognitive abilities to evaluate their own cognition. Consequently, they may incorrectly evaluate the costs that they would incur to attend university (get an education). They might then attend university and fail at a cost to themselves and to society. The might also, by some fluke, get through university and send the signal of 'high ability'. But, once they enter the workplace, their employer might then discover that the signal was untrue and they are indeed a low ability individual, which undermines the credibility of the signal for others.
But, the Dunning-Kruger effect has another side. Intelligent, or high ability, individuals generally have the metacognitive abilities to evaluate their own abilities relative to others. Consequently, they are often better at measuring when they have high ability in one subject and low in another, but they are also often victims of incorrectly evaluating the incompetence of others: they take their own ability as representative of an average ability to complete a task, therefore underestimating their own abilities. This adds a second problem: imagine that a high ability individual, falsely believing that she is a low ability individual chooses not to attend university. This further complicates the signals for companies. A high ability individual who is hired and found to be a high ability individual undermines the 'low ability' signal of no education.
Signalling theory in economics consequently faces a host of problems, at least as far as it tries to grapple agents who suffer from cognitive biases, i.e. humans. I have simplified the problems here, but it does give us a first blush of some of the problems of reconciling actual human thought processes with economic theory.
[Note: I haven't ever read anything about Dunning-Kruger and Signalling theory together, it just struck me that the one contradicted the other, what I know about Dunning-Kruger and other cognitive biases is predominantly self-taught so I may have phrased things slightly loosely. My apologies.]
Images: denitza.wordpress.com, www.motivatedphotos.com
Friday, July 30, 2010
African Science and Scepticism Blogroll for July 2010
- 01 and the universe
- Acinonyx Scepticus
- Amanuensis
- ASSAf Blog
- Botswana Skeptic
- Bomoko and other nonsense words
- Can Like To Have It (formerly Hello Universe, This is Nessie)
- Communicating Science, the African Way
- Defollyant's AntiBlog
- Digital Immigrant **new**
- Effortless Incitement
- Ewan’s Corner
- Expensive Belief
- Fluxosaurus's Blog
- Geekery
- Grumpy Old Man
- Health Frog
- Ionian Enchantment
- Limbic Nutrition
- Lenny Says
- McBrolloks
- Nathan Bond's TART Remarks
- Orion Spur
- Other Things Amanzi
- Pickled Bushman
- Psychohistorian
- Reason Check
- Retroid Raving
- Roy Jobson
- Science Blog
- Scorched
- Stop Danie Krügel
- Sumbandlila Mission Blog
- Synapses
- Tauriq Moosa
- The Joys of Atheism
- The Science Of Sport
- The Skeptic Black Sheep
- The Skeptic Detective
- Updendo Wa Asili (formerly Meh Blog)
Monday, July 26, 2010
Books for Game Theory
Consequently, in an attempt to expand the number of resources I have for problem sets, I have found a number of other books useful for finding additional problems, especially some problems outside of economics. I have several goals for the course, one of which is to ensure that the students have many problems that they can work on in order to prepare for the mid-term test and the exam. I have found a problem-oriented approach to work quite well and, as far as I understand it, research demonstrates that this is a good way to approach a course like introductory game theory. Nevertheless, I also hope to convey most of the intuitions in accessible and commonsensical situations. I have lectured the course a few times before and I am looking forward to lecturing it again after this hiatus (the last time I lectured it was for the summer term in early 2007).
Here is a list of the books I have found useful so far:
Binmore, Ken (2007) Playing for Real - Gets a bit complex for the course I will teach, but has some good examples that one can adapt quite easily for problem sets. The book is an updated version of Binmore's earlier (1991) Fun and Games.
Miller, James (2003) Game Theory at Work: How to use game theory to outthink and outmaneuver your competition - written for the businessperson wanting to understand the basics of game theory, this book has many examples that can be adapted to create problem set questions. The book could have been better edited and better conceived in parts, but it does give many typical problems in different settings that can be useful for someone producing problem sets.
McCarty Nolan and Adam Meirowitz (2007) Political Game Theory: An Introduction - this book has several basic examples with added complexity that make for good problem set questions. Moreover, it has problem sets at the end of chapters that can be used quite easily for problem sets. The book itself is a bit too formal for the 2nd year course that I am teaching, but I think that it could probably be used quite easily in a higher level undergraduate or Honours-level course where the mathematical formalisation would not be a problem for students.
Rasmusen, Eric (2006) Games and Information: An Introduction to Game Theory - Rasmusen uses a number of definitions and approaches that I would not use when teaching game theory, nevertheless he has many interesting and fun examples in his textbook that can be put into problem sets for a course like mine. Rasmusen also gets a bit too mathematical and caught up in definitions that I would not want to use.
Romp, Graham (1997) Game Theory: Introduction and Applications is targeted at advanced undergraduate and early graduate students. Consequently, the book as a whole gets too complex for my course, but several of the examples in the introductory chapters as well as 'dumbed down' versions of the applications can make good problems for an introductory game theory course.
Straffin, Philip D. (1996) Game Theory and Strategy is also a bit too mathematical for the needs of my course. Nevertheless, it also has some good examples of zero sum and non-zero sum two-person games that can be easily introduced into an easier course. The N-person games stuff is interesting, but too in depth for the way in which we approach games with many players.
Gibbons, Robert (1992) Game Theory for Applied Economists is again too mathematical for the course I am teaching, but it has numerous examples and problems that can be adapted to an easier and more intuitively directed course.
Overall, looking at all of these books has reinforced how Dixit, Reiley and Skeath is a great book for an introductory game theory course. Most of the books claim to be introductory, but aren't really, they're introductory if you've done sufficient calculus and economics, but not introductory in the sense that most second year students in an cross-faculty course would be able to deal with them. Instead they are pitched at an advanced undergraduate or introductory graduate level where there seems to be a lot of competition for that kind of book. I'm surprised that more authors haven't tried to take the path that Dixit, Reiley and Skeath have by finding a less formal way to approach game theory and hook students into an area of study that has such potential, notwithstanding its flaws (see Hargreaves-Heap and Varoufakis' Game Theory: A Critical Introduction or some of the passages in Gintis's Game Theory Evolving).
Books I'm not using:
Osborne and Rubinstein - A Course in Game Theory - Too much mathematics in an inaccessibly written way.
Binmore, Ken - Game Theory: A Very Short Introduction - Though this is meant to be a book for the layperson and I thought I might get some useful examples from it, I got the sense that someone would have had to study a fair amount of economics to make head or tail of it. Not useful.
Gibbons (1992) A Primer in Game Theory - Too mathematical and too brief, I'd use this for an advanced undergraduate course.
Gintis, Herbert (2009) Game Theory Evolving (2nd Edition) - More focused on evolutionary game theory, which I'd love to teach, but is outside the ambit of this course also requires more math than 2nd years will have.
There are many other books that I haven't begun to look at or study, especially some of the more advanced Micro texts that would be unnecessary for a course such as this. I also know that Dixit and Nalebuff have two good books - The Art of Strategy and Thinking Strategically - but I don't have those to hand and therefore did not want to comment on them.
Thursday, July 15, 2010
Collective Secular Action: Protest
On Saturday 3 July, participating the the London Pride 2010 parade and march from Baker Street to Trafalgar Square, I joined the 'Protest the Pope' section in the walking group of the pride march. We had a large placard stating that we 'Protest the Pope', the particular relevance of which for London Pride 2010 is the Pope's position on equality of sexual orientation, on 'biological differences' between people, on denying the freedom of choice to women, on Ratzinger's own criminal acts as a concealer of pedophilia in the church, etc.1 It must be noted that we were not out there to protest Catholicism or religion generally, but rather the particular positions that the pope has taken and on the ways in which he has affected government policy and pressured policy in the UK.
The march went well. To choruses like "Say yes to condoms, say Nope to the Pope", we handed out fantastic stickers protesting the pope's state visit to the UK and pamphlets about the organisation. [As a state visit an invitation extended by the British head of state to the head of state of the Vatican it will be paid for by the UK taxpayer and should cost upwards of 30 million pounds.2] We also protested the things mentioned in the paragraph above, in addition to abstinence only sex advice and more. It was a pleasure to be involved in a well-organized march on behalf of the LGBT community, but also in support of a crusade in which I believe - trying to protest the power of religious leaders in secular societies. I hope that in the future I can participate in similar protests as part of the on-going movement toward a secular society in which separation between religions and the state is constitutionally protected and in which individuals are better educated about alternatives to religious morality, of which secular humanism is one I find particularly attractive. Specifically, I would like to see increased activity in South Africa, in the mode of what Michael Meadon, Jacques Rousseau, Tauriq Moosa, Angela Butterworth, and many others have been trying to promote as and how they can (I would link to more of you, but I just can't do it Captain). I hope that it becomes more widespread and more formalised and I intend to do my bit when I return to South African. Later in the week I'll comment briefly on my experience of the Central London Humanist Group and the Westminster Sceptics - all of it positive.
End Notes
1. On this, yes, there are biological differences between men and women, for example, I happen not to have particularly large breasts. The point is that, for those things that 'count' there may be greater variation within one gender than between genders such that it is difficult to claim what is meant by 'a single biological difference' that is totally unaffected by culture or social context. It also isn't obvious that 'biological differences' imply anything about gay marriage commitments either, unless we tie it to 'consummation' that, for whatever reason, can only occur between a penis and a vagina.
2. Notwithstanding the fact that the reason that the Vatican is itself treated as a sovereign state is because of a deal - the Lateran Accords - between the then pope, Pope Pius XI, the King of Italy, Victor Emmanuel III and the fascist Benito Mussolini. 'What?' I hear you say, "We're held to deals made by a monarch and a fascist?" Indeed we are. It's contract law, see. It made the Vatican a sovereign state, see. And we can't interfere with sovereignty in international law, see? The treaty was adopted into the Italian constitution in 1947, so some may say, "Ahah! Your grievances are irrelevant." But, I don't get how one country (Italy) can decide at one of its weakest points in history on the continued existence of a theocracy that affects the world internationally. Granted, this happens all the time in the middle east, but I will support my position by saying I object to all theocracies, not just the Vatican. I do need to consider this more, but genuinely consider it to be a problem.
Monday, July 12, 2010
Rationality v. Money-Maximising Self-Interest
Anyway, I feel the need to bring this up because far too many people talk about rationality and self-interest interchangeably when they are not. One of the problems we encounter, for example is that you could hypothetically have irrational individuals, some of whom are otherwise self-interested and some of whom are other-regarding. We might not be able to differentiate between these individuals if their irrationality is such that they behave in ways that do not maximise what we perceive to be their preferences. But we may still have rational actors who are self-interested (also called self-regarding), other-regarding or bits of both. So when Ariely says that trust and punishment (vengeance) are irrational he is not actually defining the problem properly, or he's assuming that the preferences of being are in fact the preferences of someone who is an entirely self-interested money-maximising individual. I believe that the evidence indicates that most people are not wholly money-maximising and only self-interested - their preferences are structured differently. Consequently his rumpus about rationality is a poorly constructed problem about preferences and not a problem about rationality.
Later he is asked about companies and irrationality. He then talks about something 'making sense'. Logic and rationality are not the same thing. This is a sophomoric error. He talks about focus groups being less useful than we think they are. If this were irrational then it would mean that they do not help companies to make profit, because rational companies go about maximising profits (or maximising share prices or some other goal).
Ariely finally nods his head to other-regarding or social preferences toward the end of the interview when he talks about 'society' and social norms, but places nowhere near enough emphasis on it given the power he attributes to 'irrationality' and the time, content and rhetoric he dedicates to 'irrationality'. Oh well...
Otherwise, his commentary on reward-substitution, differences in time preferences and other phenomena is interesting and apposite. I recommend that you take a look at the video and see what Ariely has to say, but make sure that you realise he's trying to package the talk more accessibly.
Sunday, July 04, 2010
Cory Doctorow on Copyright
Monday, June 28, 2010
Eat and Behave Risk Aversely
Consequently, what concerns me is the eating behaviour of individuals in financial institutions. Let's say that people on Wall Street or who work in finance often don't eat in order to 'continue working' (trust me, I hear enough horror stories from friends), then these people go about deciding on the risk portfolios of their customers. They claim that they do this in an objective and unaffected way, but if hunger affects their decisions to take risks, then maybe their employers should consider enforced eating (I know that many companies subsidise food or provide it directly to their workers). Extending this logic, it would be reasonable to prefer that your stock broker had regular and healthy meals than working overtime to get in that last moment of work effort and staving off their meal. Also, if we're worried about obese individuals and dieting individuals, then I'd also rather not have an obese stock broker. A question results, might a study such as this result in statistical discrimination against obese brokers because they're more likely to take risks when hungry?
[Please note, I'm not advocating discrimination here, I'm simply trying to spell out the ways in which people might interpret the results, I really wouldn't be surprised to see a headline in a few days saying 'Slim bankers take fewer risks' or something similar.]
Thursday, May 13, 2010
Fun and Frustration Running Experiments
I've been running economic experiments with undergraduate students at the University of Cape Town. I've learnt a number of things about doing the experiments since I began. Much of this stuff was not in the first 'bible' of experimental economics that I read a couple of years back - Daniel Friedman and Shyam Sunder's Experimental Methods: A Primer for Economists. Nor have I seen it in many articles or other stuff publised about experimental economics, though I may have just forgotten the stuff that I've read. So here are some problems and insights that occurred to me.
- Recruit more people: Recruit a lot of participants and expect that between 10-30% of those who signed up won't come, you'll reach the higher bound of missing participants more readily if it's raining badly and the participants would rather not leave their warm rooms. So recruit more participants than you think you'll need, that way if there are people who don't arrive, you'll be ok. Yes, you could make mistakes, but rather end up with slightly too many people than too few on a regular basis. I over-recruited always, still I got burned with slightly too few (3 participants fewer than I'd have liked) on one day when it was raining heavily.
- Plan for Free Entry: Don't stick too strongly to your list of registered participants. Plan for people who have not registered to show up. I did this in my very first experiment, but I ended up turning two people away who I would have liked to have participate because I didn't prepare sufficiently for enough random arrivals. Often they can slot into the roles of people who didn't arrive, so they counter the forger/weather/double-booked attrition. To do this you obviously need to make the venue and time of the experiment public knowledge, which I had attempted to do through leaflets and UCT's online system (I don't know if this should be called foresight or paranoia). I know that allowing day-of-experiment arrivals may affect your sample because people may have communicated the information through social networks, but when you're playing with university students it's unlikely to have a large effect and I expect it won't have any effect at all given the other constraints you deal with when doing economic and social experiments such as these.
- Confront Disappointment Carefully: Some students don't like being randomly allocated to roles and don't understand that when everyone has the same probability of being a 'Participant A', 'Participant B', 'Participant C', etc that randomness makes the mechanism 'fair', even if the amounts of money at the end of the day if they had perceived them ex ante might be thought of as 'unfair' ex post. I had a couple of students (literally two) who emailed me after the experiment because they were annoyed they got less money than other people did. One of them said it wasn't an experiment and that I'd used him. I reminded him that many other disciplines don't give experimental participants the opportunity to make any money, or if they interview you they may not give any rewards, and when they survey you do may not give any kind of gift. It seems as though the expectation of money influenced these two students and they got annoyed with me for the fact that others walked away with more than them. Oh well... I had to deal with this, 'in the name of science' (I reassure myself). If you were wondering, the range of money that participants could walk away with was ZAR0 to ZAR120, roughly USD0 to USD16 in exchange rate terms, but substantially more, about $30 in PPP terms (by this site's estimates). That said, other students enjoyed participating in the experiment and found it exciting and interesting. I reassured the disappointed students that the outcomes were fair. I made a point of not apolosing though as that would have meant I thought something was wrong - I simply pointed out that the system was fair, they just happened to get a partner with different preferences or maybe they had poor luck. I don't think we should apologise for this, though I could be wrong.
- Deputise: Recruiting good research assistants (RAs) was a crucial step for me. I had recruited a couple of RAs for the first experiment, but not enough to deal with the havoc that can occur when people arrive late and want to play, when trying to ensure all forms are in, trying to stuff envelopes with money at a rapid pace, etc. Two of my colleagues at UCT ended up helping me during the first experiment, which I appreciated greatly. So I'd suggest that you hire at least one more RA than you initially think you need. Maybe you're gifted and can tell exactly how much of a problem X will be or Y might be. I wasn't that gifted, so I should have hired at least one more RA. My first experiment went well, but it could have gone even better or as well as the second and third experiments did when I realised I should dedicate some (of my own) money to getting RAs. You'll be happy you did it after the fact. RAs make your life easier, though they do add their own complexities at times. Also learning to deputise is itself a good skill to have and to develop.
- Plan/Play with other people: You may think you have everything covered. You're probably wrong. Bounce your ideas, your instructions, your forms, your questionnaires off of as many people as possible, both inside and outside of economics (or whatever your discipline happens to be). I don't mean "check with your supervisor" obviously you've done that already. I mean that I tested the instructions, forms, etc on my wife, my parents and my friends before I checked stuff with other economists. It helped. As did checking the stuff with economists and my useful RAs. Other people see things you don't. Use these other people. Crowdsource. Get other people involved, your ideas probably aren't so great that someone with a bit of insight could see a problem you didn't.
Tuesday, April 13, 2010
The Parochial and the Cosmopolitan - Globalization helps cooperation
Continuing my trend of reporting on papers about cooperation, I thought I'd comment on a recent paper by Nancy Buchan and co-authors about human cooperation and globalization. I've argued previously about the role of parochialism in punishment and in theories about the evolution of war and cooperation, today, though, the theme is the extent to which more cosmopolitan countries tend to foster individuals who are more willing to cooperate globally. Sounds intuitive, but how does it work experimentally?
Consider a prisoner's dilemma in the form of a multi-layer public goods game (PGG). A basic PGG works as follows: each player is given some money to contribute to a communal pot, that amount is multiplied by some factor (rate of return), but everyone gets a share of the total minus what they initially contributed. Therefore, I do my 'best' if everyone cooperates fully and contributes all their money, while I free ride and contribute nothing. It's a prisoner's dilemma in action - everyone sees this and they shouldn't cooperate. Consider a similar game, but with two communal pots: one 'local' where only people from my area can contribute to, the amount of which is then doubled and of which I receive 1/4 (3 other people in my group can contribute to it), and one 'global' or 'world' account that I and others can contribute to, the total amount of which is tripled, and of which I receive 1/12 (11 other people can contribute to it) . The tension is the following: the direct return is 0.5 from the local account and 0.25 from the world account. But if everyone contributes a maximal amount to the world account, then we all make off with the most money rather than if we had all defected and not made any contributions. This is also a prisoner's dilemma, but with more layers of complexity.
Buchan et al ran this experiment in 6 countries: the US, Italy, Russia, Argentina, South Africa and Iran, looking specifically at large cities in each of the countries. They made two hypotheses. First, globalization could lead to greater parochialism by emphasizing ethnic, local or national groupings. Conversely, globalization could have a palliative effect on parochialism and perhaps enable and sustain greater tolerance. They indexed a country level globalization index (CGI), an index produced by the University of Warwick. They also constructed an individual level globalization index (IGI) based on questions that each subject answered. The authors used quota sampling methods for gender, age and socioeconomic status (though not for rural-urban, which I comment on later).
Now we come to the reason I'm interested in the research. When the authors ran the experiments, they showed that South Africans ranked 5th out of the 6 countries in the CGI: above Iran, but below Argentina. Considering the experimental results, South Africa also ranked 4th or 5th below Italy, Russia and the United States, but almost exactly equal to Argentina in terms of probability of allocating resources to a global account. Iran came in lowest . Globalization at the individual and country seemed a good predictor of international cooperation. If you're sceptical of the globalization result, the authors also point out that:
"analysis of the CGI along with a host of macroindicators such as the rule of law, generalized trust, per capita income, and norms of civic cooperation shows that the CGI is the only macrovariable that is significantly correlated with mean cooperation rates at the world level." (4140)So, it seems as though the second hypothesis is supported by the authors results: globalization may make people less parochial and more cosmopolitan. But one problem emerges, as the authors chose to do the experiments in large cities, it is possible that they have a biased sample. There may be an underlying correlation between a person's choice to live in a big city and a person's cosmopolitanness - more cosmopolitan people may choose to live in big cities, less cosmopolitan people may choose to live outside of cities. Consequently, in the paper we may be observing an upper bound on a nation's tendency to cooperativeness because the subjects are drawn from inherently more cosmopolitan (and maybe more internationally cooperative) people. I'd like to see this research replicated with rural and urban samples to see what the differences might be. I'd suspect that rural individuals would be more likely to cooperate locally, whereas urban individuals would be more likely to cooperate globally. Thus, globalization might predict urban 'world' cooperation, but not rural as there might be differences across countries over rural behaviour. Apart from potential rural-urban differences that might exist among countries, I could not fault the experiment's design. Moreover, the fascinating research exemplified by this paper tends to make me slightly more optimistic about multilateralism and the benefits of globalization in the 21st century, though that could just be confirmation bias.
References
Buchan, N., Grimalda, G., Wilson, R., Brewer, M., Fatas, E., & Foddy, M. (2009). Globalization and human cooperation Proceedings of the National Academy of Sciences, 106 (11), 4138-4142 DOI: 10.1073/pnas.0809522106
Saturday, March 20, 2010
Apologies for the light blogging. I fly to South Africa next week and I have a number of deadlines before then (applications for conferences, grants, etc), as well as several for when I arrive in Cape Town: exam questions due for external moderator, tutorials must go up on the web, must finish and upload lecture notes, presenting a seminar a few days after I arrive... I have several half-written research posts that I hope to complete soon. So, apologies, but more research on economics and experiments will come soon.
Friday, March 12, 2010
Explain your total sheep played
When you come across a line like this in a paper, you can't help but laugh, "We now discuss and explain the cumulative number of sheep played in all rounds of the game." Yes, subjects played sheep. You may wonder how. I shall attempt to explain.
In three papers based on work in South Africa and Namibia, Bjørn Vollan and, in one paper, his co-author Bernd Hayo investigate several different experiments with the Nama people. They ran trust games, trust games with third party punishment, and common pool resource games with groups of villagers in the Northern Cape Province of South Africa and the southern region of Namibia. Their work was supported by BIOTA, a biodiversity and conservation project.So what kinds of things did they find out? And how on earth were sheep involved? Well, the Nama people spend substantial amounts of time on subsistence herding of goats and sheep. Consequently, when they played the common pool resource game, the game was framed as though the subjects were exploiting common grazing ground by choosing a number of 'sheep' to 'graze' the resource. The game works like a multi-player prisoner's dilemma where the self-interested thing for a subject to do is to 'defect' by having as many sheep as possible in the hope that no one else will choose lots of sheep, but everyone chooses lots of sheep. The social optimum occurs when people exercise self-restraint and jointly have several sheep, but not too many such that the common resource vanishes. Strangely enough, people often don't play completely self-interestedly, instead they choose something in between the individual optimum and the social optimum (see Cardenas and Carpenter, 2008 and Velez et al, 2006). In Bjørn Vollan's work, we see that the Nama also cooperate to some extent with the option to exploit the resource, and, after several rounds, they also are able to vote on adopting a self-regulating policy of punishment, reward or communication, any of which seem to result in a higher degree of cooperation. The experiments were run with groups of five. In the control, when the subjects were given the choice of between 10 and 90 sheep(in tens), 51.6% of people chose the less cooperative options of 60-90 sheep. When, in the latter rounds, a treatment for reward, punishment, or communication, could be voted on the amount of outright defection decreased to 30.7% of the sample, with 46.5% of the sample choosing the highly cooperative 10, 20 or 30 sheep (everyone choosing 20 would be the social optimum).
So we know that introducing some kind of voted rule works, but does any one rule work better? Does 'buy-in' matter? One problems is that the rankings were different in South Africa and Namibia. In the South African community, punishment resulted in lower numbers of sheep chosen with the choice stabilising at around 4 sheep on average; it worked best of all when more people in the group participating in the experiment voted for it. So a community with 'buy-in' to norms could operate more effectively (interesting enough, in the Hayo and Vollan paper there's a strong correlation between voting for punishment and being a Lutheran, one of the few religious affiliation effects they found in the subjects' behavior). Conversely, in Namibia rewards work much better, though the positive effect of decreasing the number of sheep chosen peter off. Vollan argues that this can be explained by rewards 'crowding out' intrinsic motivations to cooperate (read his paper for the full argument).
So, we know what's happened in the CPR game, but what about the trust game and the trust game with third party punishment? Recall that the trust game is a bargain between two subjects: a Trustor and a Trustee. The Trustor chooses some fraction of an endowment to give to the Trustee, the total amount of which is multipled by 3 (this act is called 'trust' below). The Trustee may then send an amount back to the Trustor. In the third party punishment (TPP) variation, a Third Party is introduced with the power to 'punish' the other players: the Third Party can pay to reduce the payoffs of players whose behavior she did not like, either the Trustor, the Trustee or both. In Vollan's results, and moving from sheep to money, we see that South African Nama trust 20% of their endowment to their partner, whereas Namibian Nama trust 40% of their endowment to their partner. The South African group is at the bottom end of all results of trust games internationally (see Cardenas and Carpenter, 2008, Camerer, 2003). Then, in the second set of experiments examing trust, punishment and relatedness, Vollan finds the results presented in the table below.
The paper presents the aggregated results and I could not dis-aggregate them for South Africa and Namibia as in Vollan's other paper. Nevertheless, the results are instructive. We can see, first, that there are substantially different results between villagers, friends and family. Moreover, introducing punishment substantially increases the likelihood that subjects act 'trustingly' (send money to the Trustee) and 'trustworthily' (send money back to the Trustor). But the effect of punishment differs greatly: villagers behave 48.4% more trustingly, friends behave 44.2% more trustingly, and family only 21.9% more trustingly. The relationship is different for trustworthiness: friends come out on top, behaving 65% more trustworthily, villagers 50% more trustworthily, and family 37% more trustworthily. Obviously these rankings occur because family members behave the most trustingly and trustworthily from the outset, but it goes to show that third party punishment may be its most effective between non-relatives in promoting trusting and trustworthy behavior.
The papers are all fascinating, particularly for a South African interested in doing similar work. I hope that the few results I have shown might have piqued your interest enough for you to go and read the papers. I presented what I perceived as the most interesting results without critiquing Vollan's methods too much. That said, Vollan could have done one or two things to improve his methods. For example, and somewhat pettily, with translation into Afrikaans (the language in which the experiments were conducted), Vollan should have translated and back-translated for consistency. Also, we could be given some additional ethnographic information about the Nama's particular institutional structures of third party punishment, though Vollan does provide information about reciprocity, gift-giving, and trusting/trustworthy behavior. He also finds (2008, 16) that the subject display inequity aversion, so I'd think that given the prevalence literature on this topic it would be worth investigating this idea more and offering some insights in the conclusion after the later results. Overall, they're a good contribution to the experimental economics, resource economics and behavioral economics literature and I thoroughly enjoyed reading them.
References
- Hayo, Bernd & Bjørn Vollan. 2009. "Individual Heterogeneity, Group Interaction, and Co-operative Behaviour: Evidence from a Common-Pool Resource Experiment in South Africa and Namibia." Philipps-Universitt Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
- Vollan, Bjørn. 2008a. "Kinship and friendship in a trust game with third party punishment." Philipps-Universitt Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
- Vollan, B. 2008b. Socio-ecological explanations for crowding-out effects from economic field experiments in southern Africa, Ecological Economics, 67 (4), 560-573 DOI: 10.1016/j.ecolecon.2008.01.015
Wednesday, March 10, 2010
Trusting and Bargaining in Africa
Are we Africans different to the rest of the world in our giving, punishing and trusting behaviour? Three remarkable economic anthropology studies try to examine this kind of question with several ethnic groups in four countries: the Pimbwe, Sukuma and Kahama in Tanzania, the Maasai of Kenya and the Ju/'hoan Bushmen of Namibia and Botswana. I can't to do any of the papers justice with my short comments, but I thought you might find them interesting nevertheless.
The three papers take quite different approaches in their use of economic experiments. Paciotti and Hadley's paper with the Pimbwe and Sukuma looks at the institutional scope of interactions, that is the extent to which cultural practices and norms may imply differences in the ways people play. They show that the two ethnic groups live differently and respond dramatically differently in the experiments. The Sukuma are agro-pastoralists with pre-existing norms of within and between village cooperation, and justice institutions (sungusungu) that punish individuals for norm infringement. Their play in the ultimatum game was more generous than the Pimbwe, with very few rejections (most likely because the offers were fair or hyper-fair). Contrastingly, the Pimbwe do not have many institutions for between village cooperation, or any third party justice institutions and their grievances are often settled with personal violence. Their results are consequently unsurprising - much lower offers on average, with substantially lower offers to those of another village. The remarkable thing here is that even the Sukuma's offers to residents of another village were higher than the Pimbwe's offers to residents in their own village. Also, the Pimbwe rejected offers (which some call punishment) substantially more than the Sukuma. The authors therefore show that even within small geographical distances, differences in institutional backgrounds alter how people behave.
Lee Cronk's study of the Maasai cultural norm of osotua fascinated me even more. Osotua is an often reciprocal relationship between male Maasai who call each other isotuatin. Osotua bonds isotuatin to each other so that they should provide for each other in times of great need, normally requiring assistance with food or gifts of livestock, or even revenge killing. So Cronk decided to see how Maasai subjects played the trust game in two settings: the first without any cultural frame, and the second where it was framed as 'an osotua game'. As you'd expect they played the game quite differently given the frame. In the control (no frame) and considering all transfers the subjects gave 35.3% vs. 28.2% in the framed condition. Considering player 1 (the 'trustor'), the transfers differ 38% (unframed) and 30.8% (unframed), though not statistically significantly so, and transfers by player 2 (the 'trustee') back to player 1 also differ: 32.5% (unframed) vs 25.5% (framed). But only in the framed condition did a strong correlation existed between the amounts given and the amounts returned show through, indicating the reciprocal nature of the osotua. Also, Cronk proposes, the lower amounts given in the osotua frame probably reflect the sense that osotua gifts are only given to assuage great need, and normally are not great amounts. Cronk argues forcibly that anthropologists and economists need to act carefully when they construct games within specific tribal and ethnographic contexts, investigating the norms that exist within a specific context, and ensuring that they tailor their studies accordingly, being careful of when they encounter norms that may alter the data that they find.
Finally, Polly Wiessner's research into the Ju/'hoan bushmen looked at their behavior in the dictator game and the ultimatum game, after which Wiessner examined their behavior in everyday life to see whether experimental behavior and behavior outside the experiment were consistent. In the dictator game, the average offer was 20%, and in the ultimatum game the average offer was 16% with 4% refusals. These averages are the some of the lowest in the world (see Henrich et al, 2006, Barr et al 2009). Notwithstanding these low within game offers, outside the game the Ju/'hoansi share tobacco, pool food resources, ostracize those who had infringed social norms (those they ostracized possibly stole a goat) and act compassionately towards those who behaved unwisely with the money from the experiments (some went to the town, got drunk the so-called "fault of the beer"). As per experimental protocols, the subjects behavior was anonymous. Wiessner was asked repeatedly during the experiments if she was lying about this because the concept seemed quite foreign to the subjects whose behavior is normally socially embedded. Wiessner's work reinforces how researchers need to align laboratory and experimental protocols with the everyday lives of the people involved; though many of us are involved in anonymous market economies the distances that separate us from those who produce the goods we produce are immense, this is not always the case. Moreover, being able to understand the spillovers of anonymous behavior to social embedded behavior and the converse can enlighten the use of experiments in urban and rural, market-integrated and non-market-integrated societies.
The papers serve as a reminder to economists (though how many economists read anthropology journals I do not know) that their work must take cognisance of cultural and institutional structures, of the frames that they introduce with experiments (think of harambee with Jean Ensminger's work), and of the parallelism between experimental behavior and behavior in parallel situations outside of the experiment. In this way, pairing laboratory experiments with field experiments and good ethnography could provide a better way to do things in future. Or so I hope.
References:
Cronk, Lee. 2007. "The Influence of Cultural Framing on play in the trust game: a Maasai example." Evolution and Human Behavior 28(5):352-358.
Paciotti, Brian & Craig Hadley. 2003. "The Ultimatum Game in Southwestern Tanzania: Ethnic Variation and Institutional Scope." Current Anthropology 44(3):427-432.
Wiessner, P. (2009). Experimental Games and Games of Life among the Ju/’hoan Bushmen Current Anthropology, 50 (1), 133-138 DOI: 10.1086/595622
Tuesday, March 09, 2010
The Joy of Nastiness
Schadenfreude, taking pleasure in someone else's pain or misfortune, seems to appear a normal thing to most people. It occurs in literature, comedy, our every day lives. But what do Economics and Social Psychology have to say about it? We know from previous research by Simon Gaechter, Benedikt Herrmann and several others that people display 'anti-social preferences' - they punish people who contribute more than they do to a public good. Now, a recent experimental paper, 'The pleasure of being nasty' by Klaus Abbink and Abdolkarim Sadrieh, tries to take some of this work forward, they investigate a game in which players can destroy the output of others without reaping any benefit from the destruction, or without incurring any cost for doing so. What do you think people might do?
Abbink and Sadrieh nested an experiment that allowed players to destroy the output of others in an experiment in which subjects were asked to evaluate adverts for a marketing campaign. They then had the option to 'destroy' the production of another person who was doing a similar evaluation. The destruction treatment came in two forms: in the first treatment (open) subjects could destroy the produce of their partner and the information was shared perfectly, in the second treatment (hidden) the information was shared imperfectly because a random amount would be destroyed. The procedure was repeated ten times. The incidence of nastiness for the two treatments differed substantially (see Fig. 1 adjacent) and people evidently took advantage of the opportunity to destroy their partner's production more when there was less chance of being found out.
So, when there is no benefit to destroying, people destroy anyway. When there is less risk of being found out by your counterpart - even though they could retaliate - people destroy a bit. Moreover, the subjects tendency to destroy did not correlate with whether they had experienced their produce being destroyed in previous rounds. Also, the subjects did not seem to be driven by inequity aversion because they often destroyed their counterpart's produce even their counterpart had the same as or less than they did. Abbink and Sadrieh make the point that we need to reconcile these results of nastiness with the many results we have about prosociality, cooperation, inequity aversion and others. The view also needs to be reconciled with our conception of rational homo economicus which might say that no rational individual would just destroy things without a pecuniary benefit. So, because I take pleasure in the misfortunes of homo economicus, I'll end by linking to the song schadenfreude from Avenue Q - 'Cos when I see how sad you are, it sorta makes me happy!'
Sunday, February 28, 2010
Carnvival of the Africans #14
Angela, the Skeptic Detective, has three fantastics posts. First, 'Atlas V makes you feel like you're tripping', in which she examines sonic booms and speed - a physics fun time. In the second post, 'How to win friends...' she examines the 'work' of Mike Adams, a 'health ranger' and his beliefs in naturopathy and the natural way. Good skeptic defence Angela. Her third post, 'Paranormal Investigators', looks at paranormal beliefs, specific South African urban legends, and their (in)validity as investigated by the South African Society for Paranormal Research.
At Communicating Science, The African Way, Muza Gondwese asks whether 'To snip or not to snip'. She presents the evidence about male circumcision in several African countries and says that there is some evidence that it helps to prevent HIV transmissions (helps to prevent minimally she highlights). She discusses policy implications for Malawi and the situation in Swaziland. A timely post for those considering the role of prevention in HIV - look at the science, do a cost-benefit analysis. (I understand this is a contentious topic, but it's still worth reading her piece).
Ross at the Science of Sport wrote an intriguing post on 'The mental edge or physiology' in sport, in which he tries to understand the role of psychology and 'mental toughness' in sport against physiological superiority. One of the problems, evidently, is that of measurability: how do we measure mental toughness? Is it the same across sports? Is there a consistent and falsifiable theory of mental toughness? He tries to navigate some of these problems in a post accessible to the layperson (so, no, there aren't any discussions of falsifiability and demarcation).
Mark Widdicombe has three good posts. The first, 'Good News', in which he describes the Lancet retraction of Andrew Wakefield's paper linking the measles, mumps and rubella vaccine to autism and bowel disorders (a skeptic victory). The second, 'Witch Professor' in which he entertainingly describes an interaction with the eponymous
doctor, has to be read for entertainment value. Finally, in 'Smoke signals', he reports on his experiences quitting smoking, doing his best to evaluate various methods for quitting smoking.
And finally we get to me. I reviewed two pieces of research. The first, 'Making money vs. Windfalls - Are you hardnosed' in which I reviewed a 2002 article investigating the methods of experimental economics - giving windfall cash to people and watching them behave. The second post, 'Neural Evidence for inequality aversion when giving away other peoples' money' applies the critique from the 2002 paper to a new paper from Nature investigating inequality aversion using FMRI. I also have a more entertaining piece, looking at whether ANCYL (a South African political organisation) knows what evidence is: 'Untrue, Fabricated, False Lies'.
On that note I'll end this month's Carnival of the Africans.
Friday, February 26, 2010
Tim Harford has a fantastic column today talking about the campaign behind the Robin Hood tax. He argued previously that the campaign was misguided, but what scares him more are the ways in which those who support the campaign - bloggers, commenters, twitterers - have tried to 'argue' to support the tax. What did they do? They appealed to authority. How? The supporters reiterated that 'Nobel Laureate Paul Krugman said [X]' or 'Nobel Laureate Joseph Stiglitz said [Y]'. Harford playfully suggested the following three other Nobel Laureates and their ideas:
- We should not levy a price on carbon. Why? Because Nobel laureate Thomas Schelling thinks that cap-and-trade schemes are a silly way to think about climate change policy.
- We should be able to buy and sell kidneys. Why? Because Nobel laureate Gary Becker thinks that it would be a good idea. [pdf]
- We should stop laying into economists. Why? Because Nobel laureate Robert Lucas thinks macroeconomics performed well during the financial crisis.
So yes, be aware of Appeals to Authority, contrast such appeals with deference, and remain aware of arguments and evidence for and against a policy, especially on a topic as emotionally charged as a transaction tax on international banking.
What's my answer? I don't know. I don't know enough about international finance to be able to say whether it'll be good or bad. I have two opposing intuitions: first it may increase volatitily rather than decrease volatility because the tax will act as a disincentive to spread your risks, second, it may decrease volatility because there will be less currency speculation. Separately, as an international student I might be taxed by it personally - depending on the exact structure of the tax - because I have to move money between South Africa, the UK and the EU while doing my research. I don't have all that much money and the little I do is very valuable to me, so the tax will, in effect, act as a disincentive for me to do what I would like to do: high quality international research for which I have to move around a lot and move money around a lot. So, though I don't know too much about it, my personal attitudes are against it (but this is a very slight probabilistic twist in one direction). We'll see whether the tax gets popular and academic support as the year progresses.
Thursday, February 25, 2010
Call for Submissions - Carnival of the Africans
I shall host this month's Carnival of the Africans on Feb 28th. If you happen to be an African Sceptical or Scientific blogger, please email me your submissions by 9pm Feb 27 so I can attempt to publish by 9pm Feb 28th. The guidelines are here. Angela, the Skeptic Detective, hosted the previous edition here. You can contact me at simon{dot}d{dot}halliday{at}gmail{dot}com. I look forward to your sceptical and scientific posts. I will trawl the web to find additional un-submitted posts that fit the criteria, but I prefer submissions to trawling.
Neural evidence for inequality aversion when giving away other peoples' money
This week's Nature has a paper by Elizabeth Tricomi, Antonio Rangel, Colin F. Camerer & John P. O’Doherty, reporting on 'Neural evidence for inequality averse social preferences'. Eurekalert reported on it here. I would have read the paper anyway, but a quotation from one of the researchers, John O'Doherty in the Eurekalert article pricked my ears up, "[We can] try to understand how these changes in valuation actually translate into changes in behavior. For example, the person who finds out they're being paid less than someone else for doing the same job might end up working less hard and being less motivated as a consequence. It will be interesting to try to understand the brain mechanisms that underlie such changes." Now this interpretation would be great, if that's what the experiment had examined. But it didn't. I suspect that O'Doherty was led on by the journalist to say something 'print-worthy'. I comment briefly on the paper, and examine what we need to do to make more claims like O'Doherty's above.
Here's the description of the method from the article:
Twenty pairs of healthy, previously unacquainted male participants participated in the experiment. They were each paid a base $30 fee; each then drew a ball from a hat, labelled ‘rich’ or ‘poor’. The ‘rich’ (high-pay) subject received an immediate payment of $50, whereas the ‘poor’ (low-pay) player received no bonus payment. They then performed an identical task in consecutive fMRI scanning sessions. In each trial subjects viewed possible monetary transfers from the experimenter to themselves and to the other player, ranging from $0 to $50 (Fig. 1). Participants rated how appealing they found the possible transfers on a scale of -5 (very unappealing) to 5 (very appealing). After both players’ scans, a single trial was randomly picked from the set, and the transfers for that trial were paid out.They're basically simulating a dictator game between the experimenter and themselves where all the money is 'windfall', that is unearned money. That leads to the first problem. As I've argued previously and will continue to argue people treat windfall money differently to how they treat earned money. Secondly, when people see that all your options involve only 'giving' to others and not 'taking away' from them then that immediately frames the experiment as something to do with generosity or giving money [see comments on Bardsley paper on this here]. When I know that I could be given something, and someone else could be too, I will react differently than to a situation in which I could have stuff taken away from me while someone else is given something, he could have something taken away while I get something, both of us could have something taken away, or both of us could be given something. I do not know what the ventromedial prefrontal cortex will do in these situations and I think that Tricomi et al should investigate this to see what happens to their results.
Aside: I really appreciate Colin Camerer's work. I draw on it heavily for my dissertation research and I marvel at his output. But I worry about how the work in this paper might be interpreted in the press and by the general Nature readership who may not understand some of the nuances.
Wednesday, February 24, 2010
ANCYL misunderstand Cronin
Oh gosh, it looks like I'm going to have to comment on South African politics again. Floyd Shivambu waxes incoherent about Jeremy Cronin's recent public letter about transparent debate about nationalisation. Shivambu said, "Why a communist cadre in the form of Jeremy Cronin refuses to constructively input into the nationalisation of mines perspective even when humbly requested to is worrying. But as they say, blood is thicker than water." What does that mean? Let me get this straight, Cronin writes constructively about the debate (having been asked to do so), but Shivambu thinks Cronin is incoherent and destructive? Well let's look at why.
Let me state outright that I'm not a communist, but I think Cronin is one of the most coherent, if occasionally wrong, members of the communisty party and of the tripartite alliance. Otherwise, I am a big fan of his poetry and have substantial respect for him as a white man who stood his ground during apartheid. We needed more like him.
Anyway, back to the article. Cronin says, "Behind the headline stories of high-life parties and the flaunting of ill-gained wealth, lies the sordid reality of manipulative sponsorships, wheeling and dealing, organisational factionalism, arm-twisting and the general subversion of our democratic order.” Ahhh.... so that's what annoyed Shivambu. Cronin was criticising Shivambu's, Malema's and many other fair-weather socialists' proclivities to parties and spending. Oh well, poor Floyd.
Next thing, Cronin says that “Our socialism is fundamentally about waging a struggle, here and now, with and in defence of the workers and poor.” How can Shivambu have a problem with that? The workers and the poor? I must have misunderstood the position of ANCYL to not see this as a problem.
Cronin goes on to say, “[SACP policy] is certainly NOT about "capturing" the ANC by infiltrating communists onto ANC electoral lists! If communists enjoy popular support and endorsement from within ANC structures that's great. But they serve in ANC positions as ANC members. We want to have capable, honest and hard-working ANC cadres as ANC leaders - some will be communists, many will not be. Rather a capable non-communist ANC comrade in a leadership position, we say, than a less capable ANC member who happens to be a communist.” Oh gosh! There's another potentially veiled insult. Cronin would prefere efficient and effective capitalists in the ANC than ineffective communists. Again, how can that be a problem? Oh wait, maybe Shivambu realises that Malema is basically an incapable and ineffective croney capitalist. Oh well...
Cronin makes several other coherent comments:
Recent bank bailouts could be considered 'socialism for capitalists'
Better to quote it, “public sector ownership, on its own, is no guarantee that this public property will not be plundered by senior management for their own private accumulation purposes.” And also, “It would be the height of hypocrisy, by the way, to be calling for "nationalisation" on the one hand, while being intimately involved in the private plundering of public resources on the other.” Ahah! I can see why Shivambu might dislike that - no lining the pockets. Poor Floyd.
“In advancing our perspective on socialisation, including progressive nationalisation, the SACP fully intends to locate this advocacy, and any other discussion on nationalisation/ socialisation, within the context of our shared alliance strategic priorities - jobs and sustainable livelihoods; health-care; education; rural development; and fighting crime and corruption. We must all guard against the opportunistic appropriation of "nationalisation", treating it as a stand-alone issue and using it as a rhetorical badge of "radicalism". Any progressive call for nationalisation needs be a coherent and do-able part of an overall democratic programme.” Wait, you mean Cronin actually wants to have democratic processes? You mean he doesn't want to be populist. Floyd, Floyd, Floyd how is this not constructive?
“Grand-standing doesn't help. Threatening comrades that you won't vote for them in future elective conference unless they support your position is infantile and unhelpful.” Ahah, there it is again, not-so-veiled criticism of grandstanders like Malema and Floyd. Understably, Floyd doesn't like it. Floyd labels all people who disagrees with him 'reactionaries' or 'counter-revolutionaries'. Evidently Floyd doesn't understand Democracy or Freedom of Speech. Poor Floyd.
“The current crisis around governance, golden hand-shakes, exorbitant tariffs, and failures to actually effectively deliver in many SOEs provides us with an opportunity to advance (not the cause of privatisation, as the DA will do) but rather their effective and increasing socialisation - i.e. subordination to the logic of meeting social needs not private profits.” Ahah! Something else constructive that Floyd doesn't think is constructive: a clearly articulated position on nationalisation. But Floyd doesn't seem to like being articulate. Poor Floyd.
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