Monday, December 11, 2006

On Human Nature

In a piece of research published last Wednesday in Nature, Manfred Milinski of the Max Planck Institutes in Germany studied how people responded to rewards and punishments. Some of the results will come as no surprise to students of human nature, but it's an important and exciting study nevertheless.

The researchers created a game where participants each put an equal amount of money in a pot. If everybody participated, the pot was doubled, and evenly distributed. As long as those rules were followed, participation increased. However, the rules were changed so that some folks did not contribute. These were not punished, and even received a larger part of the pot, diminishing the pay-out for the actual participants. After a few rounds of these rules, participation fell apart.

The researchers tied this observation to the "tragedy of the commons" effect (see Wikipedia article). In that model,

a hypothetical example of a pasture shared by local herders. The herders are assumed to wish to maximise their yield, and so will increase their herd size whenever possible. The utility of each additional animal has both a positive and negative component:

* Positive : the herder receives all of the proceeds from each additional animal
* Negative : the pasture is slightly degraded by each additional animal

Crucially, the division of these components is unequal: the individual herder gains all of the advantage, but the disadvantage is shared between all herders using the pasture. Consequently, for an individual herder weighing up these utilities, the rational course of action is to add an extra animal. And another, and another. However, since all herders reach the same conclusion, overgrazing and degradation of the pasture is its long-term fate
(from Wikipedia)

In the context of a workplace like a library or a law school, one analogy would be the disincentive to hard workers of seeing a slacker get the same or greater rewards.
In the Nature research noted above, there was a new step introduced:

scientists then offered the players two options: They could reward fellow players with good reputations. Or they could reward cooperators and punish defectors, paying a fee to take money from the defector.

Overall, the carrot-and-stick option generated the most money for the pot when compared with reward or punishment alone, said Manfred Milinski of the Max Planck Institutes in Germany.
(from Globe article linked in title)

One could imagine allowing co-workers to vote on each other's compensation, but that seems ripe for abuse. In the workplace, I think it's probably up to management to make folks feel that rewards are distributed fairly in proportion to the merit, and to confidentially use the stick if necessary. How would this research apply to law students? A very interesting piece of research!

1 comment:

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