Boompa Mary John good afternoon thank you for being here so many of you it is a great honor for me to introduce professor Tora Ellingson professor of economics at the School of Economics of Stockholm I believe those who already learnt some details Ellingson got his degree in economics in Norway then he started in Stockholm he was granted to the PhD at that on the School of Economics and that's 496 he has a chair of economics in Stockholm ah he carried out research as an industrial economics economist or perhaps he should be termed as a scholar of industrial organization and indeed focused on game theory professor Toru Ellingson may indeed be considered as a scholar of game theory the reason why is here with us today is that he's one of the most original player in the field of behavioral economics and experimental economics or experimental game theory most specifically and this is a very important field he concentrated on branch that tries better to understand the motivations as they are studied by economists that is how to add to the economic reasoning the whole of potential economic motivations and social motivation as well and sentiments feedings moral feelings characterizing moral action now to introduce professor ed links and they're only very briefly because it won't take any more time so mmm just a couple of words I wish to say that we should make reference to one of the founding father of economics ie Aidan Smith who wants to add gayness to the science know that usually the concept of economic efficiency is explained based on the third coordination virtues of the market through an invisible hands and I would have an above that Edna Smith is the author of the theory of moral feelings presenting many moral feelings that may motivate human action Adam Smith is the philosopher of the visible hand the most important moral feelings he refers to sympathy and the fellow feelings that is this expression of sympathy towards those that have industrial relations with us his master is a philosopher that was quoted also in the science by Professor Tory a links in and I was very pleased of seeing that because I myself before becoming an economist was in perhaps a seal em I feel ossifer myself for so to learn that colleagues there are fully fledged economists and that draws so importantly to these major thinkers cannot first be a very nice discovery for myself or so with the master rhythm Smith as I say that that is David Hume to stress the importance of the compress of the presence and simultaneously of selfishness one at the same time the development of attachment feelings and social feelings alike when that developer when social rules obtained so there is the feeding basically is guided by if the desire to conform with the others economists have neglected this aspect for too long and these are the philosophy that actually trigger the study of economics they focused more on the wealth of nation rather than on the moral feelings as the two aspects of it myth now going back to the seventies and eighties top economists trying to capture these further elements are these reasons for action including in them in their models and that has been done from standardizing standardizing point of view we can for example refer to Amartya Sen okay narrow and this is published some kind of this science established relationship with philosophy but when such models had to be implemented with the idea of social well-being there was always the problem that the description of economic behavior was that of the irrational selfish man so the noblest aspiration had to come to terms with the impossibility very noble things if the economic acting action had to only to be guided by the selfish and rational attitudes so you had to be compatible with that type of incentives that would do away with many other options now over time and professor Lennox and is indeed one of the key player in this development with trying to discard economic actions with a wealthier range of feelings other motivations and not just the selfish motivation the social preference was introduced as that of mutuality mottling the economic behavior with economic models and with an important development of experiments and professor Tory Ellingson he is very competent is a fully fledged scholar on both these field he is indeed micro economist an experimentalist a theoretician of game theory and certainly one of the most representative player in the this branch of study and amongst the experimentalist I believe that he's one of the most important because he dropped in theories and then he controls his theories as well as other assumptions so he's not just collecting data with his experiments about some high it and somehow he make and confirm an innovative assumptions that I'm going to give him the full straightaway but there's just one thing that I'd like to add and that is that there are examples of the he's a very recent experimental studies that are most important are the ones aimed at proving whether there is or there is not propensity to lie or a propensity lie or an aversion to lying in economic behaviors and he says despite what economies to say that and that is that we are autistic as a matter of fact indeed there is an aversion to this is not total but it grows the lie that you have to tell and it grows also with the intensity of the proponents of the promise you enter so if we make very strong and the heavy promises we tend to lie well this well if this study had been carried out of where they talent politicians rather than would pursue these students probably the result would have been different but anyway it is always interesting obviously to you know see the result that was obtained with this experimental studies and it is very interesting that it does there is a comparison between the generalized mainstream ideas on economic and issues as coach opposed to the Kantian ideal whereby an ally is always a failure and there is another important to study on guilt aversion something that would experimenter when the others have a great great expectation on behaviors guilt basically is the result that we obtained when we believe that other people expect something from our behavior and again going against previous conventional assumption professor Ellingson has proved that guilt aversion is not that strong if it is just based on the fact that we believe that other people may expect that we do something so there should be additional motivation explaining what happened that hour is not 100 percent selfish what is most interesting and I believe that he will dwell on that and he's going to be very interesting to discuss on that what is very interesting is the contribution to modifying our idea of incentives there's a hot debate on how to incentive it workers managers and economists always believe that that material incentives were most important at this by the fact that psychologists have always been trained especially in the recent times that the opposite was true this led to important mistakes being made in economic discipline for example many hopes were pinned on incentives given to the managers that obviously brought a very negative results and professor Tory Lanez has a very nice explanation to that in that we are touching portents the esteem and we're very proud of being estimated and praised by people that we praise in s holding great esteem and these are either fine Asafa cool Oh I'm a psychological concept and these things have been added in micro economic models that are very sophisticated where we have the green hand then we have a theory explaining many evidences so if an employer checks on these workers to strictly obliging them forcing them rather than the entrusting them he basically will obtain the less of a cooperative attitude on their side or so basically there is a pervert there's a mechanism there's an negative mechanism that can be triggered by this kind of flat of of trust so you see that Professor Ellington is a very creative writer contradicting many of the things that actually we would usually expect from economists so forth mainstream means stream theory so I believe that he can certainly pave the way to new any normative approaches in economics and instead this much and I think that I've been taking up even too much of your time with the great honour and the great pleasure of giving him I have the great honor and pleasure of giving the floor thank you thank you so much for those kind words and thank you so much to the organizer for setting up this wonderful event that I think must be unparalleled in the world in the spring of 2001 I went to New York on a holiday busy with work and family and I was never much of a traveler I hadn't been to New York for a decade exiting the taxi from the airport it suddenly struck me that I didn't have a clue about the tipping convention on Manhattan here is my dilemma on the one hand the taxi driver had behaved impeccably that is he appeared to have taken the shortest route and he was friendly enough on the other hand the dollar was very expensive at the time so please have the picture back up and I was paying with my own money and the bill was quite hefty maybe some loose connection therefore my desire was to pay the conventional tip but no more than that in the end I decided to ask the driver about the standard rate of tipping on Manhattan looking very uncomfortable the driver insisted that the tip was entirely up to the customer and that he could not help me in making a decision Thanks so five minutes later having retrieved the guidebook from my suitcase I led back on the hotel bed wishing that I'd paid more can you imagine what it felt like I'm convinced that many of you instinctively understand both my desire to act appropriately as well as my feelings upon failing to do so surely it would be impossible to maintain a tipping rate of close to 20% as in New York where it not for the fact that many people desire to follow social norms and feel bad when they do not but here's a remarkable fact for more than a century these desires and feelings which most of you I think can identify with have had essentially no place in economic theory no matter how you twist and turn the standard textbook model of economic behavior it offers no compelling reason for why a lonely visitor to New York pay pays tips for good service or feels bad about having under tipped a driver who didn't even want to disclose the conventional tipping rate what is worse the textbook doesn't even say much about the role of social norms in supporting honesty civic virtues or good workplace behavior either behavioral economics is the name for research that attempts to base economic theory on better psychological foundations the purpose of this talk is to offer a behavioral economists personal view on human motivation in general and norm obedience in particular and be warned when a scientist says personal view it means that the perspective will be utterly egocentric with shameless focus on own research and this talk is no exception now consider the following question to what extent is it wise when designing the institutions of a society or the internal governance structure of a business firm to assume the worst about the rulers the citizens or the workers now worst-case thinking has a long and distinguished pedigree for example David Hume in 1742 insisted that a political system ought to assume that rulers are knaves not angels in modern times all over Williamson's theory of the firm assumes that people people are opportunistic with guile lying and cheating if it serves their interest if we take such reasoning to the extreme as is many economists natural inclination what does it imply for the organisation of society well frankly the simplest economic model formulated by the famous Chicago economist Gary Becker suggests death penalty for the slightest misdemeanor supposing that the evidence is convincing enough what a vast discrepancy there is between this view and popular management strategies such as trusting respecting and empowering the workforce I hope to convince you that there is a connection between the small issue of tipping and the large issue of constructing appropriate incentives for people to obey laws and to do a good job and that this connection has to do with individual's desire to comply with social norms however in order to prove my point I need to provide you with a little background now of course economists never actually denied that social norms are important what happened was that norms somehow dropped below their radar screens now this is no place for a detailed recapitulation of the history of economic thought about social norms but some background will be useful unlike physics where the state of knowledge appears to move uniformly forward at least as seen from my frame of reference the social sciences have occasional lapses where time moves words that is the wisdom of our Newtons is only partially integrated in the work of our Einsteins the upside of this phenomenon is that reading 18th century social science classics is a more exciting experience than reading the natural science classics of the same period my expose will start already in 1651 with Thomas Hobbes his famous book Leviathan my favorite quote about human motivation in Hobbes runs as follows desire of praise disposes to laudable action such as pleases those whose judgment they value in other words Hobbes thought that people are motivated not only by material self-interest but also by social esteem especially the favorable opinion of respectable others well Hobbes notwithstanding economic theory really starts about a century later with David Humes book from 1739 a treatise of human nature as the book's title indicates Hume was convinced here's David Hume Hume was convinced that society is best understood when viewed through the lens of human psychology one of my favorite David Hume quotes runs as follows though faiman general be agreeable yet we receive a much greater satisfaction from the approbation of those whom we ourselves esteem and approve of than those whom we hate and despise I anticipate that you may have two reactions to this quote the first is dear Joffe this is just a restatement of Hobbes's notion of desire for price the second reaction you may have is confusion is this the same David you you may wonder who in 1742 or in this talk just a couple of minutes ago advocated the view that all rulers are knaves yes it is indeed the same David Hume and there is no contradiction Hume argued that all rulers tend to be knives not that all humans tend to be knives the difference according to you is that honor or prestige which keeps humans in check when acting on their own accord is insufficient for checking the behavior of rulers as a collective Hume so the need for worst-case thinking in laying down the rules to govern the rulers but did not see a need for worst-case thinking when designing institutions for ordinary people Adam Smith was a student of David Humes and shared most of his views regarding human nature including the notion that people adhere to social norms for prestige or honor reasons my favorite Adam Smith quote runs as follows nature when she formed man for society endowed him with an original desire to please and an original aversion to offend his brethren she taught him to feel pleasure in their favorable and pain in their unfavorable regard she rendered their approbation most flattering and most agreeable to him for its own sake and their disapprobation most mortifying and most offensive now it's a striking fact that Adam Smith's first book the Theory of Moral Sentiments from 1759 is also his last book because despite the fact that better known Wealth of Nations was published in 1776 1776 it was Moral Sentiments that smith persisted in revising repeatedly for 30 years until the 6th edition appeared in 1790 the year of Smith's death in fact these two works are closely interwoven the liberal and fair society that Smith envisaged in Wealth of Nations would according to Smith have to rest on the pillars of social norms he had already described in Moral Sentiments the big paradox of modern economics is that it came to study the upper levels of Smith's theoretical construction long before paying attention to the foundations on which it had been erected our textbook models of competitive markets are only valid if there are basic legal institutions that protect property rights and facilitate exchange and in order to be effective these legal institutions in term must be solidly grounded on widely accepted social norms now when economists from about 1870 onwards paid increasing attention to markets in general and to price formation in particular the students of social norms at universities gradually left economics and the subject was taken over by other disciplines not least by the emerging field of sociology that was constructed partly by frustrated economists who tired of the increasingly abstract and formal study of price formation however with the advent of game theory and especially after John Nash's dissertation from 1950 the formalizes themselves had acquired a new beautiful tool with which to re-engage in the study of social norms the literature on repeated games largely initiated by an article by Robert Ullman in 1959 proved to be a source of deep insight concerning the enormous potential for cooperation that exists even among people with strongly diverging interests the general insight from the theory of repeated games among patient players is that these games tend to have a huge number of equilibria and that it is usually possible to encourage players to cooperate rather than to defect through credible threats of moving to an equilibrium that is less desirable for the defector unfortunately however there are two problems with this approach first if there are many-many at Libya the Theory loses predictive power a theory that can account for everything is not refutable and therefore explains nothing the second problem and that's the problem which concerns me here is that the theory of repeated games does not seem to offer an explanation for my behavior in New York in the spring of 2001 the whole point of my tipping example is precisely that I would not meet the taxi driver ever again neither where there are any other people present you might punish me for under tipping of course the driver could have enlisted the help of the police if I had been refusing to pay the amount on the meter but no policeman within the tipping norm as the driver had said himself tipping is entirely up to you a good theory of tipping behavior must explain why when we visit New York and other places with strong tipping norms we we voluntarily pay good money to perfect strangers despite the fact that these strangers seem to be much better off than many others who sit and beg on the streets of the very same cities preferably the theory should also have something to say about my feelings as I lied there on my bed in the Manhattan hotel room reading the guidebooks information about appropriate rates of tipping behavioral economics is now a well-established subfield of economic science one day the term behavioral may might even come to be seen as superfluous good economics will then simply apply the behavioral assumptions appropriate for the case at hand given the recent upswing in behavioral economics it's easy to forget just how immensely unpopular it has been for a long time many mainstream economists insisted on always assuming that people are selfish materialists I vividly remember how a famous game theorist dismissed the question of tipping at restaurants oh he said tipping a small change the implication the theory only needs to be roughly right let's ignore the minor shortcomings like so many social scientists he forgot that minor discrepancies between theory and evidence forms the form the very basis of scientific discovery if physicists had ignored minor discrepancies we would presumably still believe that the earth is the center of the universe in an important contribution to behavioral economics Gary Becker argued that people are altruistic or kind they care about others now I think that kindness colors my concern for my children and occasionally my kindness might even suffice to help a stranger in desperate need but it'll have to be really desperate but is kindness the reason why we cooperate with strangers can it explain tipping I do not think so and again I would like to bring back Adam Smith as my expert witness ok here he comes every man is much more deeply interested in whatever immediately concerns himself then in what concerns any other man and to hear perhaps of the death of another person with whom we have no panic particular connection will give us less concern will spoil our stomach or break our rest much less than a very insignificant disaster which has befallen ourselves now let's it let's at least agree that we don't tip out of kindness so why do we do it after hours of introspection I think I know why I tip let's see if you can guess it so what exactly do you think that I felt there on the bed having short-changed the New York taxi driver did I think and here's one alternative oh how embarrassing now he'll believe that I'm a stupid greedy bastard or did I did I think poor driver how disappointed Eve must have been okay so how many believes in embarrassing let me show hands and how many will believe oh poor driver how disappointed may have been okay so the majority got it right I was embarrassed but there are two reasons why I asked you this question the first is that much social science research is created with a yawn people say I knew that already and to some extent you knew that already because you've got some help from the introductory remarks psychologists have come up with a good name for this phenomenon namely hindsight bias but I guess you knew that already now the other reason why I ask for your gas is that both the hypotheses have their proponents in the literature the first hypothesis the one focusing on my embarrassment is called the shame hypothesis this the second hypothesis the one focusing on the drivers disappointment is called the guilt hypothesis okay so I've told you that in my case I was feeling shame indeed it's the fear of shame I think that propels me in this very moment too if you were to leave and dislike my talk I'd be feeling shameful because you were thinking badly about me rather than guilty about wasting your time as guilt is nobler than shame it hurts me to say it but apparently I feel strongly enough I'm strongly not attached to normal honesty not to lie to you in order to say a little bit more about the prevalence of guilt and shame let me take let me tell you about some experiments that I've been involved in a particularly simple experiment is the so-called dictator gam in this experiment two persons participate in the standard design the two persons sit in different rooms and typically are unaware of each other's identities if the experimenter knows their identities we have a so-called single blind design if even the experiment they can't find out who did what we have a double-blind design one of the persons called The Dictator or the divider is given a sum of money by the experimenter for concreteness let us say that the sum is 10 euro the other person gets nothing from the experimenter the only task in the experiment is for the person with the money to decide how much to give to the other person a typical pattern of behavior in dictator game experiments is that a large fraction of dividers keep everything the second largest fraction gives exactly one-half in this case five euro whereas most of the remaining subjects give either two or three euros in order to find out why people give experimenters including myself and my colleagues have varied different features of this very simple dictator game design and let me just briefly tell you about some of the results that we find when we vary the design the first result is that dividers give more money the more they know about the recipient in the extreme case the recipient is a close friend and gets a lot of money typically half however even when the recipient is randomly chosen from a huge telephone book there is actually suitable giving but much less now maybe this variation says something about how kindness varies with closeness but hold off your judgment until you've heard about the other regularities the second regularity is that dividers give more the less anonymous they are so the anonymity can range from complete anonymity where even the experimenter has no chance of finding out who gave what amount to complete publicity where even the recipient where even the recipient gets to know who the dictator was the third regularity is that dividers give more if the recipient has an opportunity to send a message before the dictator chooses and these messages typically take the form of a request or a moral argument fourth regularity dividers give more if the recipient will have an opportunity to send a message after learning the dividers choice these messages often take the form of praise especially in the case of an even split or disapproval especially in the case of no sharing at all so here by the way is direct evidence on the role of Prez that Hobbes wrote about more than three hundred and fifty years ago in a single blind setting the dividers give about forty percent more when they anticipate written verbal feedback than they give when no feedback will be forthcoming now in order to probe more directly the roles of guilt and shame my co-authors of I and I we have conducted the following experiment first we tell a group of dividers that they are in a dictator experiment and then we let them make their divisions then we inform the dividers that well actually they have an exit option instead of going through with the division they can choose to stop the experiment without the recipient even learning that there would have been one we then ask the recipients how much money they would need to have in order to prefer this exit option and we ask it in such a way as to guarantee honest answers so unless you're very interested in the procedures I'll say say use details of the a specific truth elicitation mechanism that we use and I should also say that this is follow-up work that we've done after an original article by Jason Danna and his co-authors now if people give for altruistic reasons dividers should never exit for less than ten euro why is that well they had the opportunity to keep the ten euro at the outset if the divider preferred to give some money to the recipient it means that the divider preferred that allocation to just having ten euro for herself therefore she would need to get more than ten euro in order to exit right so let you let me show you a graph in this experiment so each divider had 100 Swedish kronor on the horizontal axis here on the horizontal axis I depict how much the dividers choose to give to the recipient okay so here are their donations they vary from from zero you see up to 100 you can't go beyond 100 because that's that's what that's the amount they had on the vertical axis I depict how much divider is required in order to exiting instead of going through with their original decision so these are the exit reservation prices the size of the bubbles in the graph indicates the fraction of dividers making each pair of decisions as you can see the largest bubble is here at 0 0 100 so what does that mean these are the dividers who did not give anything and who wanted at least 100 in order to exit in other words the largest fraction of behaviors corresponds exactly with the economics textbook model however the largest fraction is still a small minority of the dividers in fact a majority of the dividers gave something and should according to the theories we've been talking about require more than 100 in order to exit do they not at all in fact the second most common behavior is here to divide equally to give 50 and then require only 50 in order in in order to exit so these subjects just like actually 64% of all the dividers in this figure they violate any kind of reasonable preference order that is based on the outcome exclusively indeed it seems that the reason these people give in the first place is based on what the recipient believes or will believe about them and upon learning that recipient doesn't need to know the subjects then behave completely selfishly I've already told you that I personally believe more strongly and in shamed and in guilt so shame would be my gasp concerning the explanation of our data dividers give in order for recipients not to think badly of their actions rather than in order for recipients not to be unhappy but my argument would obviously be more convincing if I could show you an experiment which would dismiss the guilt hypothesis directly therefore we conducted yet another dictator game experiment this time we asked recipients to guess the average amount that dividers would give without telling the recipients each recipients gas was then communicated to the corresponding divider if the divider would be averse to feeling guilty higher gases now ought to be associated with higher donations okay and here is a figure of our data on the horizontal axis are the gases okay here what what what dividers guessed that the average would be so here you see one this I should say these are the recipients Gaza and I think so this was a 120 kronor experiment that must be why there is a 120 here okay so these are the sorry these are the recipients gasses about how much they would be receiving on average so this so these these numbers are extremely optimistic here and here are some some very pessimistic numbers down there people who think that nobody is going to give anything at all in this experiment but most people are in between as you can see there is simply no correlation at all between these two magnet magnitudes so my interpretation is guilt is not showing up at all here if it had been guilt a version that was driving donations you were afraid of disappointing people well then you should be systematically giving more the more people were guessing that they would receive now anthropologists are not surprised by our findings feelings of guilt turn out to be quite you quite unusual in human cultures and traces are found almost exclusively in modern individualistic communities shame on the other hand is a human Universal it's found in virtually all known cultures the evolutionary anthropologist Daniel Fesler has launched the hypothesis that shame is a basic feeling that has evolved from rank related emotions when our ancestors human and pre-human lived in small hierarchical groups already Charles Darwin in his books descent of man from 1871 and the expressions of the emotion in man and animals from 1872 suggested that our feelings have deep evolutionary roots let me quote from the scent of man at how early a period the progenitors of man in the course of their development became capable of healing and being impelled by the price or blame of their fellow-creatures we cannot of course say but it appears that even dogs appreciate encouragement praise and blame the following is an immediate consequence of Darwin's view or social emotions may be every bit as poorly adapted to our current environment as our desires for fat and sugar however it's also possible that the lack of adaptation has seen from the point of view of the individual or more precisely the individuals genes could entail fortuitous effects at the group level that is to say feelings of pride and shame may may no longer serve an adaptive function for us but these feelings could for a long time help to sustain cooperations cooperation at levels that may be unsustainable in the ultra long run note that this argument suggests a way in which repeated games reasoning is relevant actually for my tipping experiment of for my tipping experience after all the repeated game strategies that were selected for in the ancestral environment may have been encoded in our instincts so as to make us do the right thing automatically these instincts and their associated feelings now come to apply even when the situation is no longer always one of repeated interaction between individuals in tightly knit groups support for this view comes from experiments in which behavior is manipulated through more or less subliminal cues for example other things equal the presence of an image of eyes on the computer screen or a robot in the room where dividers make their decisions such images or such presences will increase donations in dictator games likewise displays of behavior that the signal gender typical desirable traits can be primed by first getting the subject into a romantic mode romantically primed females single here romantically primed males single resourcefulness no then with these insights about human nature in hand let's return to our original question how should we design institutions should we be taking the worst-case route or are there dangers of doing so within the so-called human relation schools of human relation school of industrial sociology the view is that the worst-case route is dangerous employers who behave as if their employees are lazy thieves may encourage the very behavior the very lazy and opportunistic behavior that they fear the pessimistic prophecy becomes self-fulfilling Richard TIPNIS famous sociologist suggested that blood donation in America or sorry suggested that blood donation in America went down as payment for blood were in was introduced because people didn't want to sell their blood for money now you wonder can this be true can it really be counterproductive to control penalize or reward people in a recent field experiment my colleagues call maelstrom and Mongoose unison demonstrated that Fitness is right at least when it comes to young Swedish women the women who were offered monetary compensation were less willing to become blood donors than women who were offered no such payment similar negative effects of incentives have been established in several laboratory experiments where one subject is acting in the role of an employer who can decide whether or not to use control or punishment threats to induce compliance from a subject playing the role of the agent that is the employer chooses between trusting and not trusting the agent in these experiments - there are clear negative effects of the of the material incentives agents often cooperate more when trusted then when controlled of course there could be several reasons for why worst-case thinking is sometimes self-fulfilling maybe just leading people to enter a selfish decision frame encourages selfishness or is it actually that payment for good deeds dilutes the social esteem that could be had because the audience cannot decide whether the behavior is idealistic or not recent experiments both in the laboratory and in the field support the latter hypothesis when people give to charity or donate blood without being watched material incentives served to increase charitable behavior but when they are watched material incentives matter for people they can be detrimental my own favorite hypothesis is that an employer who himself displays selfishness is in no position to encourage unselfishness among employees an unselfish employee doesn't care about impressing such an employer with self-sacrifice recall what David Hume said we receive a much greater satisfaction from the approbation of those whom we are self esteem and approval than those whom we hate and despise idealistic workers seeking the recognition of other idealists will work harder for a boss who has proved his own idealism than for a boss who does not even believe that idealists exist and who therefore Institute's surveillance and incentive systems to handle the worst case scenario that workers are crooks now perhaps that is why I felt extra terrible that day in New York the taxi driver refusing to offer information about the tipping Convention came across to me as a hard-working fair-minded person whose opinion of me thus mattered all the more be that as it may let us all rejoice in the fact that social science is connecting again that is connecting again with its roots in particular that economics is coming back to the realm where other social sciences have been a long time taking seriously David Humes proposition that society is best understood in light of human psychology and you don't need to take my word for it or even the word of all these old some some of them dead male economists that I've shown you take the word of one of the leading political scientists of today reflecting on what she has learned from studying the governance of common-pool resources many hundred fisheries forestry irrigations stems and grasslands all around the world she says setting payoff structures for rational egoists may have been misdirected and perhaps even crowded out deformation of social norms so what do you think thank you that's a multiple visto presented Sione credo BIA chain try to perfect the maintenance very much for your presentation which has certainly fulfilled all my expectations I believe we got a couple of minutes for a Q&A session are there any questions from the floor please only short questions or short remarks you're all kindly invited to participate I believe that there are some microphones around and I believe we can accept three questions and then we'll we'll give the floor to our speaker to reply to your questions and then if with time we will proceed with another triad of questions so who's going to break the ice ooh you chew on a persona cuervo little la primera : Lana Lang go pronto Bonzo good afternoon I have a very simple question you have carried out experiments and as the chairman said initially professor Cooney this has been done in your country where there is a certain social and cultural context couldn't the place context the location context where the experiment is carried out influence the experiment itself that is is there the possibility that cultures evolve in a different way in relation to this issue what I mean to say is the very same experiment in the 60s in Italy versus in the 90s in China may give totally different results so this is my question thank you I believe there there is another request for question at the back there so found that in many poor developed countries developing countries corruption is a major reason why they have not developed and if you look at the United States today and the current crisis I believe corruption of the government also plays a major role in why there's financial crisis is occurring and I'd be curious that you know when you look at a country like Argentina it's not the case that the people don't know that their leaders are corrupt they absolutely are certain that their leaders are corrupt but the people themselves also steal a little bit each day from each other and I was wondering from your research this sounds to me like a country that has reached one of these lower levels of equilibrium in which they're not maximizing their what their own welfare is by cooperating I was wondering if you had any suggestions that might change their norms of behavior nobody woke at their lair well I liked it when you quoted Darwin and its work on human behavior Darwin used to stress that to drawing conclusions on the way how human beings can behave based on his evolutionary history might be a risky business since man evolution has led to such a high level of complexity of structures all including man psychology so that things that may be of a certain origin can then lead to totally different behaviors when the context has changed so you can't infer what a person things just starting from the idea that his or her brain structure developed millions of years ago or thousands of years ago so maybe this has also been the mistake of evolutionary psychology could this new research program of behavioral economics also be liable to this bias if everything is ball bound to controlled experiments that probably have a circumscribed a limited validity couldn't this be a contribution to the mistake of old or traditional economics of reaching general conclusions forgetting about anthropological sociological and cultural research which maybe without complicated experiments without evolutionary explanations have already come to these conclusions and have better appreciated how complex human behavior is original Canaries positive buoyancy temple let's proceed with the answers and at this time we'll move to other questions and I've had only little time to think about them so my perfect ad might my answers won't be as perfect as I would wish them to be so let's start with the question of the cultural context of experiments and and the conclusions that you can draw from them yes indeed this is something that we do know having conducted the same set of experiments all over the world this is true in particular for the so called ultimatum game but also to some extent the dictator game has been conducted in very many different cultures and we know that people's behavior differ very wildly there is a very nice book summarizing this evidence book is called foundations of human sociality if I learn something from that book is that this seems to be a universal tendencies to try to follow norms and people bring their norms into the lab with them so they try to understand the lab experiment in terms of you know they ask themselves what should a person like me do in a situation like this and they try to interpret the experimental situation through some analogy with a situation in the society where they live so so this cultural relativity it seems to me is a very encouraging thing it offers hope because it really means that human behavior can be changed through cultural change we don't need to change you know the the basic human psychology which maybe maybe maybe we're all really the same right when when someone is adopted from Africa to Sweden they quickly adopt the Swedish way of being so so I think that you know the very fact that these experiments play out differently in different cultures it was is what gives us hope that the cultural Channel is indeed a viable channel for improving on our societies so that was question number one question number two I think in some way is related it was the corruption and development that many for many countries corruption is maybe the biggest the most obvious problem hampering development and and you were I think you were even suggesting some of the some of the answer to this yourself when you said that well there is corruption among the leaders but also there is some corruption among the general population now what would David Hume say he would say well leaders you always need to have imposed worst case institutions you want to have institutions that are robust to leaders being crooks there shouldn't be enough space for them for leaders to actually be corrupt you have to curtail their corruption if you can curtail the corruption of the rulers then hopefully we can alway also get rid of much of the corruption further down in the society because here I completely agree with Roland an Abu who in this room yesterday said that well there is this trickle-down that if if other people have certain beliefs in particular if leaders have certain beliefs then these beliefs are inherited I think that's true also for for behavior and social norms the norms that the leaders will follow are also the norms that the followers will follow so if you start by curtailing the behavior of leaders and in this case by by by but by strong institutional checks and balances their behavior I think that's the necessary first step the third question I think poses a slightly artificial dichotomy but an economy that is very pronounced in the scientific debate namely that between biology and and culture so I think on the one hand we know very well and you did not deny that humans aren't blank slates so I think so those people who tried to renounce Darwin and said that well there is no such thing as evolutionary psychology I think that's very dangerous a very unscientific position to take because there is just so much evidence of evolution in human psychology so you can't dismiss all that evidence at the same time to believe that you know that all all human and social behavior is is determined by by these by this biology that's equally false ok there are so they just as our body imposes certain constraints so does our psychology impose certain constraints but within those constraints through our just massive change massive change is possible and we've seen that change we know that cultures are very different that countries are very differently organized and that this is and it's not really geographically bound because we see these changes over time Sweden can grow from being one of the world's poorest countries 100 30 40 years ago to being one of the richest countries in the world largely because of improved institutions so this is what I meant when I said I think this dichotomy is false we should not entertain it altered Amanda questioning more questions there's somebody asking for the flow here in the front yes I just wanted to know in the experiment on the tater ship experiment is it possible to contextualize it in the content in the context where they're donors who give out money in developing countries if so how would you explain how corrupt governments still continue to receive donations from other countries so what what could be the the other factors that contributed to this considering that there's a corruption element and these governments continue to receive donations from from the donors from that what would call dictators thank you are you familiar with that part of Adam Smith where he speculated that he felt the future of mankind was very poor since precisely as you say wanting a steam he would just end up buying baubles and slaves rather than producing anything of value that there would be a competition for a steam based on a social or even anti-social activities I wonder what your reaction to that is I assert it does exist I don't know if you know it and and how that points to how difficult it is to initiate change when yes culture is malleable but the norms reflect the structure and the structure reflects the norms a gentleman I will be the third in order to all the people to Cherie temple gently presser a little demand so should I speak Italian or English what would you prefer so two questions there actually to collect intertwined collecting questions one Erickson made the distinction between shame and guilt and my question is as follows the falsification of guilt may not not depend on the fact that their way of understanding guilt was only based on the idea that my sin is my guilt is the result of the others excitations on my action in that I only develop guilt because I don't meet other people's requirements other people's expectations but that expectation in itself has no normative content to wish why should I feel any guilt for not complying with what others people expect from me so if I basically go only against a belief or an expectation there should be a social norm connected to it to make me feel truly guilty and this seems to be the reason why shame seems to be more forceful in that shame is attachment passed by others on my action as I did not comply with a rule that obviously I acknowledge so apparently what is important is that the normative value of norms as it were so my question is as follows so shame perhaps is just the explanation of not respecting norms of not complying with norms but it could also be that we accept norms and we wish to comply with those gnomes provided that the others do likewise and this would be the explanation of the sense of justice that is drawn from Cantor or John Rawls so I would like to ask professor Ellingson what is the potential explanation then second question the second question on your experiments on esteem or praised no or the design to be praised by people who were holding it in high esteem whom we praised in the number of your works you establish a connection between this team and the talent that these people may have with these skills that these people may have so for example I could be happy to have other people consider me a talented man or I tell the truth or lie with respect to my talents to my skills well don't you think that this could be a source of problems in that as a matter of fact it is not so straightforward that there is a moral norm stating that talent or skills should be appreciated as separate from efforts what is our merit if we're skilled or talented why should we feel praised by the fact of having a talent if there's no effort to wish so does talent deserve praise in one of your experiences mariand if the employee does know water skills imply and he believes is Louise and making an effort not knowing whether these people are talented or make an effort they work more they work harder perhaps because they believe that their efforts can be appreciated rather than the skill or talent which is totally coincidental and fortuitous so my question is don't you think there's a problem in bringing this or building this bridge between estimate or steam rather esteem and talent talent being fortuitous again you may be born in Italy or in Stockholm or in Africa and you may be born with talent or without talent whereas effort or endeavors is something that should be praised so I think that again my question is on talent being chosen as one of the distinctive traits which that we're doing can help explain or shed light over why it is that for example people in the developed world governments in the developed world continue to give help to developing country governments that are very corrupt and I think so there are two there are two obvious explanations obvious theoretical answers to this and the one is that well in these countries with corrupt government governments you also find some of the world's very poorest people and you feel so strongly that you need to help these poorest people so even if only a moderate fraction of what you're giving will reach the recipient you feel an obligation to help them so that's the altruism motive but then of course you have this other motive that part of reason why in general we give certainly in this dictator experiments is we give in order to look good and somehow having this concern displaying this concern for the worst of people is socially prestigious so it's done for that reason now which of these are the most likely or whether any of these are really a good explanation I I truly don't know maybe there are other mechanisms at work that better explain why this happens and maybe we can talk about that after okay so Carla HOF asked a question about Adam Smith being pessimistic about you know using social esteem or people's concern for social esteem for the good and I think so that is a skepticism that has been shared by many people down the road but I should say so Smith himself was absolutely concerned that that people's concern that people's desire for honor and and in particular for justice that these emotions were very good but then it comes this that but then there are types of of prestige that he thinks is bad and Thurston Veblen of course his concept of conspicuous consumption is what should we say is a later manifestation of the same worry in fact when you look at management thinkers such as Chester Barnard when he says when he discusses why a high wage or or large bonuses would provide good incentives Barnard says well it's not the money as such it's the esteem that goes with the money that's the real motivator now and I should also say that nobility so remember nobilities desire for titles medals and so on and so forth has been criticized by the left as you know creating a segregated Society and I think so we could continue to produce examples I think where desire for prestige is is a bad thing but likewise we can we can come up with examples where a desire for social esteem is a good thing so yesterday Rachael Grantham spoke on on the organization of the US military were actually soldiers are not being paid very well at all but instead they are led to internalize social norms and to be proud to do the right thing in in complicated complicated circumstances and you know to display a certain set of of values so for me that's that's the challenge it seems that people have kind of almost a universal need for social esteem and the challenge for us is to somehow channel what I see as a fundamental need to challenge that in good directions so as a society how can we harness these desires not not for promoting competition and and status races but instead for for good pro-social actions I think it's very nice when when when Bill Gates and Warren Buffett's instead of building monuments physical monuments over themselves and spending lavishly they give money for for eradicating malaria I think the more the more prestige we can give people for that sort of action the better it is so that third questions were actually two questions on shame versus guilt and you say that well maybe there are circumstances in which people actually do care or do take action in order to avoid guilt and that is when when somehow the yeah so I said in general you don't care about disappointing others and you say well maybe you care about disappointing others if their expectations are morally justified I think that's a wonderful point and I think that you or someone else should run an experiment to try to find out just how good that point is okay that's you know we should be just philosophizing about these things let's find out and I should say I mean like Carla told me the other day that she always gets surprised by experimental findings so do i okay I have strong priors what I will find I don't often fly and what I think I will find so there are strong reasons for actually trying this out experimentally your second question had to do with esteem for talent and your argument that there isn't very much of a normative foundation for why we should esteem talent and I agree with that I nonetheless think it's inevitable that talent will be esteemed and here we come back to Darwin again and sexual reproduction as I said when you prime men romantically they just want to display how resourceful they are and I think no amount of social engineering is going to get rid of this right so whether whether that's morally good or bad we can discuss but I think this is something that we can't easily construct our way out of there are some some some types of behaviors and and this goes for females too I mean we see modern females also wanting attention for physical attributes and so on and so forth that is very hard to see any moral justification for this remember it's terribly hard to eradicate Adam and the unit is pasta perky to be a mere intro like I have to close my 4:30 salon because it's you know there will be another meeting after that and we need to prepare the room even though our speaker has already come here the one for the next session so do not leave because the speaker of the next session is already here with us anyway we can allow one more question and answer well first of all thank you very much and congratulations thank you for enriching me with your presentation and congratulation because it was a very good presentation I have a question on a very relevant topic and it's at the moment one of our ministers the waged war to this called lazy public officers claiming that it is possible to increase the profitability and productivity of public administration by rigid behavioral norms regarding working time and absenteeism this has certainly led to a significant reduction in the number of missed working hours by Italian public workers who more strictly follow their working timetable now conversely in the past there was a high degree of flexibility and in the past people went came and went as they liked but now they go at 8 o'clock precisely and live their office at 2 p.m. on the spot so in your opinion this rigidity applied to public administration in a non differentiated way because everybody would be blamed of being a lazy person even if he or she provided an enormous contribution in terms of productivity even at different working hours well in your opinion can this improve productivity or do you believe that these measures can have a negative consequence in terms of the motivation and productivity of state employees right that was a very precise question but I would like to add the following when let's suppose that 100 euros are available as an incentive so the office leaders will have to divide their stuff in three categories the topmost 25% in terms of productivity will receive 50% of the bonus 50% will receive the other 50% and the remaining 25% independent of the effort they made but since they ranked third in this classification will get 0 so of course this is a sign of lack of appreciation towards them what do you think about this incentive mechanism how does it sound to you ok I'm actually glad that you said I only had to answer one more question because I think that the first question was easier to answer than the second one right so I think it's important to make myself clear when I say that there are certain downsides to using controls supervision strong monetary incentives and so on I do not want to say that using such instruments are never justified so when I say that worst case thinking it could have some downsides I'm also not saying that you could never be right to do worst-case thinking actually I think that many of the example where worst-case thinking leads in the wrong direction is when you cannot really control very well anyway and then you control all the all you can but there are still so many degrees of freedom that you can't trol very well and you just so you only have the downside almost almost only the downside that's the real danger when you can control quite well too often reasons to do so and also I think when you have established very poor norms you suggested that maybe work morale was at a very low level and then you have and then even the people who intrinsically would like to behave well they don't get any social esteem from it because the environment it's not expected of them and and anyone and and in their neighbor one will not believe that that they're doing good work anyway so for them it's very helpful if you can you know you can increase the image of of everyone so it sounds to me I don't know much about this reform but it sounds to me that pursuing such reforms can be perfectly consistent with the line of thinking that I'm advocating