8.12 Age of Coercion or Age of Reputation?
163
8.12 Age of Coercion or Age of Reputation?
In an attempt to stabilize our socio-economic system, many governments have tried
to (re-)establish social order from the top-down, by increasing surveillance and
investing into armed police. However, this control approach is destined to fail due
to the high level of systemic complexity, as I pointed out before. In fact, we have
seen a lot of evidence of this failure
24 . The signs of economic, social and political
instability are all around us. Therefore, it is conceivable that our globalized society
might disintegrate and break into pieces, thereby creating a decentralized system.
Is there a way to avoid such a fragmentation scenario? Can globalization be
realized in such a way that cooperation and social order remain stable? Given that
it is possible to stabilize the traffic flow using traffic assistance systems, can we
also build an assistance system for cooperation? In fact, there are a number of new
possibilities, which I will discuss now.
8.13 Costly, Trustworthy Signals
Let us dive a bit more into the subject of group competition and assume that different
groups apply different social mechanisms. To study this setting, Michael Mäs and I
have recently made a laboratory experiment, in which we had two teams of players,
each of which collected money in a separate “pot”. In their own team, the players faced
a collective goods problem as outlined above. However, their overall investments
into the team’s pot as compared to the investments of the other team determined their
chance of winning the team competition. If the investments in the first team were
twice as high as the investments in the second team, the first team had a chance of
two thirds to win the “jackpot”, here: the sum of both pots (see Fig. 8.2).
We gained a number of remarkable insights. First, the competitive setting led to
higher investments in both teams. Second, it was interesting to see how well different
mechanisms perform when competing with others. In our experiment, “costly punishment” was compared with no mechanism supporting cooperation (“no institution”)
and with three kinds of “signaling”, which allowed players to indicate beforehand
that they were willing to invest into their team’s pot. “Free signaling” did not require
one to pay anything to send a signal to the own team; “costly signaling” required one
to pay a fee; “altruistic signaling” was costly, but the fee was paid to the other team
members and split between them. In terms of the probability of winning, “costly
punishment” beat all other options and “altruistic signaling” was the second-best
option. “No institution” was more effective than “free signaling”, which was again
more successful than “costly signaling”.
However, when considering punishment and signaling costs, costly punishment
was actually not the most efficient mechanism. The winner was altruistic signaling!
24 For example, in Iraq, Ferguson, Baltimore etc.
163
8.12 Age of Coercion or Age of Reputation?
In an attempt to stabilize our socio-economic system, many governments have tried
to (re-)establish social order from the top-down, by increasing surveillance and
investing into armed police. However, this control approach is destined to fail due
to the high level of systemic complexity, as I pointed out before. In fact, we have
seen a lot of evidence of this failure
24 . The signs of economic, social and political
instability are all around us. Therefore, it is conceivable that our globalized society
might disintegrate and break into pieces, thereby creating a decentralized system.
Is there a way to avoid such a fragmentation scenario? Can globalization be
realized in such a way that cooperation and social order remain stable? Given that
it is possible to stabilize the traffic flow using traffic assistance systems, can we
also build an assistance system for cooperation? In fact, there are a number of new
possibilities, which I will discuss now.
8.13 Costly, Trustworthy Signals
Let us dive a bit more into the subject of group competition and assume that different
groups apply different social mechanisms. To study this setting, Michael Mäs and I
have recently made a laboratory experiment, in which we had two teams of players,
each of which collected money in a separate “pot”. In their own team, the players faced
a collective goods problem as outlined above. However, their overall investments
into the team’s pot as compared to the investments of the other team determined their
chance of winning the team competition. If the investments in the first team were
twice as high as the investments in the second team, the first team had a chance of
two thirds to win the “jackpot”, here: the sum of both pots (see Fig. 8.2).
We gained a number of remarkable insights. First, the competitive setting led to
higher investments in both teams. Second, it was interesting to see how well different
mechanisms perform when competing with others. In our experiment, “costly punishment” was compared with no mechanism supporting cooperation (“no institution”)
and with three kinds of “signaling”, which allowed players to indicate beforehand
that they were willing to invest into their team’s pot. “Free signaling” did not require
one to pay anything to send a signal to the own team; “costly signaling” required one
to pay a fee; “altruistic signaling” was costly, but the fee was paid to the other team
members and split between them. In terms of the probability of winning, “costly
punishment” beat all other options and “altruistic signaling” was the second-best
option. “No institution” was more effective than “free signaling”, which was again
more successful than “costly signaling”.
However, when considering punishment and signaling costs, costly punishment
was actually not the most efficient mechanism. The winner was altruistic signaling!
24 For example, in Iraq, Ferguson, Baltimore etc.