Lessons from cooperative economics, Part 3

This is part 3 of "14 lessons from A Cooperative Species By Samuel Bowles & Herbert Gintis, 2011.

Part 2 shows that correlated equilibrium is better than Nash equilibrium, and that some correlating signal is needed to maintain human civility as we know it.

This part touches briefly on the concepts that are covered in the latter half of the book.

Overview of chapters 6 through 9

Chapter 6 covers how cooperation got bootstrapped in ancient times.

Chapter 7 is on the coevolution of institutions and behaviors -- essentially suggesting the co-evolution of culture and genetics.

Chapter 8 covers parochialism and war.

The fact that altruism and parochialism may have a common evolutionary origin, whether cultural or genetic, does not mean that the two are inseparable. Examples of tolerant, even anti-parochial, altruism include subjects in some intergroup behavioral experiments, the electoral support in many countries for tax-supported economic aid to the people of poor nations, and the participation of people of all ancestral groups in political movements against racism.

One thing covered in this chapter that I don't surface very much in my summary overview is the importance of war in evolutionary biology, according to the authors. The book seems to suggest that warfare played a substantial role in the evolution of altruism. Kind of ironic, but there you have it -- becoming good at warfare improved in-group cooperation, and helped those groups compete better against other groups. Ultimately, they argue, the outcome was the evolution of altruism.

Chapter 9 does some computer simulations, showing how “Opportunists” ruin a group. It then goes on to demonstrate that Punishers are necessary to stamp out not only infiltrators, free-loaders, and shirkers, but also eliminate Opportunists and Cooperative Nonpunishers. Some theory is provided arguing why Punishers prevail in terms of Darwinian selection.

The latter part of chapter 9 delves deeper into what I consider to be the most interesting part of the book -- their model for a decentralized social order.

Evolution of Strong Reciprocity

A predisposition to cooperate and a willingness to punish defectors is what we have termed strong reciprocity, and it is the combination of the two that is essential to the large-scale cooperation exhibited by our species.

Punishment

Reduces the gain that can be had by free-riding.
Encourages self-interested individuals to cooperate.

Coordinated Punishment

Here is where things get interested from the perspective of decentralized consensus.

Previously it was argued that punishment improves group effectiveness, and that centralized punishment over large groups is a recent cultural evolution and still quite ineffective. This section shows how decentralized punishment works.

Outline of the model

The initial period in the life of a group has three stages.

A signaling stage in which at cost q, punishers can signal their intent to punish any defector. The cost of signaling is high enough that it does not pay to signal and then not to punish.
A cooperation stage, during which individuals can choose to cooperate or defect.
A stage where defectors are detected and punished.

Cooperation costs the cooperator c and benefits each member of the group b=n. We assume b > c > b=n. Were there no punishment option, the interaction would be a public goods game (n-person prisoners’ dilemma) in which the dominant strategy would be to not cooperate. This is both why punishment is necessary and cooperative game theory + correlated equilibrium are good explanations, because people DO cooperate, but WOULD NOT if not for punishment along with a correlating device (say, our norms or a centralized institutional enforcement agency).

The punishment stage is decentralized -- individuals coordinate with other punishers to administer punishment. Individuals that do not do their part in helping monitor compliance or to mete out punishment can also be punished for shirking their duty.

Hunting and Warefare benefit greatly from coordinated behaviors.

Humans are excellent at clubbing and throwing projectile weapons compared to other animals.

While size, strength, and vigor generally determine the outcome of animal disputes, victory often involving great cost even to the winner, in human societies, through the use of coordination, stealth and deadly weapons, even a small number of attackers can defeat the most formidable single enemy at very low fitness cost to the attackers.

While hunting and warfare are clearly important to survival, much of the challenge is in getting in-group behaviors to be more cooperative than competitive. The reasons non-cooperative game theory works so hard at ensuring the truthful operation of participants is because of the following:

(a) Self-interested members will typically have something to gain by misrepresenting the actions taken by others. (b) Mistakes happen, and with classical game theory this causes the group to spiral into anarchy.

Modern large-scale societies, we observed, convert private to public information by judicial processes that took centuries to evolve and that presuppose that court officials, jury members, and law enforcement officers adhere to standards of professional conduct that preclude the unrestrained pursuit of self-interest.

Smaller scale ancestral groups devised other ways to convert private to public information. Gossip, group discussions with all or most members present, and taking meals in public are examples.

For larger groups, a decentralized approach is required, along with an internalized correlating device combined with social norms.

Socialization

Individuals who developed the capacity to internalize group-beneficial norms would feel chastened when punished for violating these norms. This is less costly to the group overall than punishment that would diminish the individual's ability to contribute. To persuade group members to internalize these norms entails some degree of socialization, which takes some effort. Groups that devote their socialization practices to this end would thrive.

Conformist cultural transmission may arise for a variety of reasons, ranging from an evolved social learning strategy in which individuals regard the population frequency of a trait as a measure of its desirability, all the way to population-level institutional arrangements for the deliberate socialization of the young, in which the content reflects which types are prevalent in the population. We stress the latter for empirical reasons: most societies devote substantial time and resources to deliberately socializing the young to act in ways that are beneficial to others, and an adequate explanation of social preferences needs to take account of this fact

At some point along the way, cultural learning results in effective norms, and eventually these norms are internalized, either by socialization, or for certain powerful norms, genetically resulting in Gene-Culture Coevolution.

A considerable fraction of the total available time of the members of most societies is spent teaching the young the proper way to behave, rather than providing for the nutritional and other needs of its members. But in addition to the cost of acquiring such a norm (u>0), there is a further cost: the rule will not be ideally suited to all situations, and its internalization deprives the individual of flexibility in dealing with such situations on a case-by-case basis

Why, then, are humans so susceptible to internalizing general rules? because it relieves the individual from calculating the costs and benefits in each situation and reduces the likelihood of making costly errors. [ precomputing frequently needed results for rapid access … similarly as with other more primary emotional reasoning ]

A similar argument led John Stuart Mill to remark, “Being rational creatures [sailors] go to sea with it [the Nautical Almanac] already calculated; and all rational creatures go out upon the sea of life with their minds made up on the common questions of right and wrong, as well as on many of the far more difficult questions of wise and foolish”

Social Emotions

Individuals maximize a utility function that includes five distinct motives:

one’s individual material payoffs,
how much one values the payoffs to others,
this depending on both one’s unconditional altruism
and one’s degree of reciprocity, as well as
one’s sense of guilt or shame in response to one’s own and others’ actions.

Punishment not only reduces material payoffs of those who transgress norms, but also may recruit emotions of shame toward the modification of behavior.

In some societies many defectors react to being punished by increasing their contribution to the group, even when the punishment does not affect material payoffs. This is evidence of a shame response.

In other societies the punished react by counterpunishing contributors, consistent with an anger response.

Social emotions in response to sanctions can thus either foster or undermine cooperation.

Reacting to sanctions, then, is often not a dispassionate calculation of material costs and benefits, but rather involves the deployment of culturally specific social emotions. The altruistic punishment of shirkers by strong reciprocators can proliferate in a population and sustain high levels of cooperation. Social emotions and punishment of miscreants may be synergistic, each enhancing the effects of the other.

Conclusion

“Any animal whatever, endowed with well-marked social instincts, the parental and filial affections being here included, would inevitably acquire a moral sense or conscience, as soon as its intellectual powers had become as well developed, or nearly as well developed, as in man.” -- Charles Darwin, The Descent of Man Chapter IV (1873)

How did it get started?

The authors propose that their model of decentralized social preference arose due to small tweak to previously existing mechanisms, that improved upon the existing mechanisms.

kin-based altruism
- ceased discriminating against the non-kin members
reciprocal altruism
- deleting the proviso that one should condition one’s behavior on expectations of future reciprocation

These traits evolved over tens of thousands of generations and approximately 150,000 foraging bands. This number of generations combined with this number of competing groups provided ample opportunity for nature to tweak the competitive behaviors and yield the progenitors of modern cooperative behaviors. They believe that the group structured nature of human populations played an important role on human evolution.

They believe that another major contributor to evolution of these valued traits was the cultural transmission of empirically well-documented behaviors such as the internalization of norms, within-group leveling, and * between-group hostility.

They believe that contrary to what the theories based on self-regard may say, that genuine altruism provides a more accurate explanation of much of human cooperation. This means a willingness to sacrifice one’s own interest to help others, including those who are not family members, and not simply in return for anticipated reciprocation in the future.

The challenge of explaining the origins of human cooperation has resulted in the following:

Led them to study social and environmental conditions of life of mobile foraging bands and other stateless small-scale societies that arguably made up most of human society for most of the history of anatomically modern humans.
Made noncooperative game theory (which assumes the absence of enforceable contracts) an essential tool.

But most forms of contemporary cooperation are supported by incentives and sanctions based on a mixture of multilateral peer interactions and third-party enforcement, often accomplished by the modern nation-state.

It would thus be wise to resist drawing strong conclusions about cooperation in the 21st century solely on the basis of our thinking about the origins of cooperation in the Late Pleistocene.

But the fundamental challenges of social living and sustaining a livelihood that our distant ancestors faced are in many respects not fundamentally different from those we face today. Modern states and global markets have provided conditions for mutualistic cooperation among strangers on a massive scale.

Altruistic cooperation remains an essential requirement of economic and social life.

The reason is that neither private contract or governmental fiat singly or in combination provides an adequate basis for the governance of modern societies.

Social interactions in modern economies are typically at best quasi-contractual.
Some aspects of what is being transacted are regulated by complete and readily enforceable contracts, while others are not.
Transactions concerning credit, employment, information, and goods and services where quality is difficult to monitor provide examples of quasi-contractual exchanges.
Where contracting is absent or incomplete, the logic of Adam Smith’s invisible hand no longer holds.
Decentralized markets fail to implement efficient allocations.
Governments typically lack the information, and often the motivation, necessary to provide adequate governance where markets fail or are absent.

We now know from laboratory experiments that subjects in marketlike situations with complete contracts tend to behave like the Homo economicus of the Adam Smith of The Wealth of Nations, but when their contracts are not complete their behavior fortunately resembles more the virtuous citizens of the Adam Smith of The Theory of Moral Sentiments.

Quotable

Thus, where the invisible hand fails, the handshake may succeed

Social preferences such as a concern for the well-being of others and for fair procedures remain essential to sustaining society and enhancing the quality of life.

Closing

In a world increasingly connected not just by trade in goods but also by the exchange of violence, information, viruses, and emissions, the importance of social preferences in underwriting human cooperation, even survival, may now be greater even than it was among that small group of foragers that began the exodus from Africa 55,000 years ago to spread this particular cooperative species to the far corners of the world.

Part i : Introduction.

Part 0 : Overview of 14 key lessons of cooperative economics.

Part 1 : Overview of competing alternatives.

Part 2 : Failures of non-cooperative theory.