The Rational Animal: How Evolution Made Us Smarter Than We Think (12 page)

So far we have talked about the different rulebooks used by our status, kin-care, and affiliation subselves.
But which of our subselves actually uses the rules of market pricing as developed by rational economists?
You might be afraid to find out.

FOXHOLE ECONOMICS: THE SELF-PROTECTION GAME

In 1221, the residents of the Persian city of Nishapur confronted the ultimate game theory dilemma.
Their city was surrounded by one hundred thousand Mongolian warriors on horseback, led by Genghis Khan, who sent a messenger with the following ultimatum: “Commanders, elders, and commoners, know that God has given me the empire of the earth from the east to the west.
Whoever submits shall be spared, but those who resist, they shall be destroyed with their wives, children, and dependents.”

Surrendering to an alien army rarely results in a happy outcome.
Throughout history, conquering tribes have tended to regard the conquered as somewhat less than human and have rarely felt compelled to be fair as they exploited the vanquished people’s resources, stole their women, demanded tribute, and often forced the vanquished young men into military service.
Genghis Khan would compel the men in the last town he conquered to march before his troops into their next battle, then use his horses to push them into the moats of the next city on their warpath, allowing the Mongol horsemen to ride over their bodies.
But for the residents of Nishapur, even these possibilities
were better than having Genghis Khan’s army slaughter everyone on the spot.
The negotiation with Genghis went quickly: Nishapur surrendered.

But sometimes intergroup negotiations are less nasty: outsiders have things we want, and it can be useful to form alliances with them.
Despite his sometimes brutal acts of conquest, Genghis Khan set up the world’s most important trade routes, connecting Asia, the Middle East, and Europe.
Of course, human beings become especially wary about possible unfairness when they’re exchanging goods or services with members of other tribes, Mongolian or otherwise.
Unlike your kin, the members of the other tribes do not share your genes, and unlike your friends and associates, strangers share no history of reciprocity and trust with you.

This is where market economics come in, providing a system to regulate the careful accounting of costs and benefits.
Monetary systems provide an elegant means to directly compare the value of Honeycrisp apples, Apple iPads, Kotex minipads, text-messaging services, and erotic massages.
But in market exchanges, sellers count every penny, and buyers are wary of shoddy merchandise, with each side quick to anger at any hint of unfairness.
The rules of rational economics are deeply rational when the top priority is protecting yourself from getting burned.
And this is why our wary self-protection subself operates using the rules of market pricing.

While market pricing is relevant to understanding how people deal with wary strangers, it does not represent how the mind calculates exchanges between relatives, friends, or people higher or lower in the status hierarchy.
Yet if you peruse the expansive literature on decision making, you will discover that the majority of theorists and researchers have presumed that some variant of market pricing drives all human decisions.
This makes sense to the extent that economists are trying to understand how investors deal with competitors on Wall Street.
These rules might also help psychologists understand how people interact with perfect strangers, like most of the people they meet in laboratory experiments.
If someone is a perfect stranger, it makes sense that he or she might defect in a prisoner’s dilemma.

But a central point in this book is that economically rational market
principles apply to only a fraction of human decisions.
Most of the time, we’re dealing with relatives, friends, neighbors, coworkers, and long-term business partners.
We even come to have relationships with the people who sell us groceries or automobiles.
Only rarely do we deal with total strangers.
And most of the time, rather than trying to skulk away with the biggest bag of money, we stick around and try to get those other people to like and respect us and care about our welfare.
If you use the rules of free market rationality with the people around you, you are likely to find yourself without too many intimate associates to worry about.
Indeed, a tendency to treat others in a coldly calculating manner and to try to get them to serve your interests, while giving as little as possible in return, is an indicator of sociopathy, which psychiatrists consider a mental disorder.

Speaking of intimate associates, we haven’t yet discussed two more exchange systems, those used to calculate costs and benefits between romantic partners and between spouses.
Unless all of your intimate relations resemble those between a prostitute and a john, you are unlikely to be using the rules of free market rationality in your amorous relationships.
The rules of the mating game are so interesting that we dedicate an entire chapter to sexual economics (see
Chapter 8
).
For now, let’s reconsider the rules of market economics in the business world in light of what we’ve learned about how our different subselves reckon self-interest.

IS MARKET ECONOMICS ANY WAY TO RUN A BUSINESS?

Although market economics doesn’t apply to relationships with friends and relatives, at least we can assume it makes sense in the business world, right?
It’s only business, after all.

Actually, no.
Unless you’re involved in a onetime negotiation with a total stranger about how many pesos to pay for a pound of pomegranates, market economics typically makes for bad business.
Cold, hard rational self-interest might make sense in dealing with potentially hostile strangers you’ll never see or hear from again, but it doesn’t work too well when you’re dealing with people with whom
you’ll be doing business for any length of time, be they coworkers, clients, or simply repeat customers.

Frederick Winslow Taylor, the father of “scientific management,” was the ultimate capitalist philosopher.
Working in the steel industry around the turn of the twentieth century, he observed, “The fundamental principle upon which industry seems now to be run in this century is that the employer shall pay just as low wages as he can and that the workman shall retaliate by doing just as little work as he can.”
His ultrarational solution to this problem was to calculate the precise amount of financial incentive that would motivate workers to boost production rates and allow his company (Bethlehem Steel) to fire the majority of its less efficient coworkers.
One biographer notes that Taylor was “so deeply hated by the men that he had to walk home under armed guard for fear of an attack on his life.”
The same biographer suggests that Taylor’s rational scientific-management approach inadvertently “contributed more to labor unrest than AFL founder Samuel Gompers and Socialist party founder Eugene V.
Debs combined.”

So, things don’t go so well if you treat your colleagues like strangers negotiating over the price of a mango in a crowded marketplace.
And as we’ve seen, the rules of the marketplace get completely thrown out when we’re dealing with family members.
But if you’re not running a family business, is there anything you can do to foster a more cooperative and trusting environment?

BRINGING HOME ECONOMICS TO WALL STREET

One key difference between the hard-negotiating market-pricing model and the easygoing family model is trust.
Remember that even according to the economic rules of game theory, the best outcome in a prisoner’s dilemma comes when both people trust each other enough to cooperate.
The problem arises when you can’t trust the other person.
Will your fellow crook really honor that pact of silence?
Because the other person has large incentives to defect on you, many economists presume that he or she will.
If that’s the case, the most rational decision for you is to defect as well, unless you want to end up with the sucker’s payoff.

But unlike in the Wall Street game, there is less incentive to defect in the kinship game.
If your brother cheats you out of some benefit, he is also, from an evolutionary perspective, cheating himself out of half that benefit.
Because the two of you are aligned genetically, you trust that he is, compared to a stranger in the marketplace, less likely to defect on you, making you more likely to cooperate.

An important implication of all this is that people can negotiate or run a business using a mistrusting psychology of market economics or a trusting psychology of family relations.
The key is to switch people from one to the other, even if they aren’t your relatives.

In one interesting study, evolutionary psychologist Lisa DeBruine came up with a clever way to convert wary strangers into kin.
She had people play a version of the prisoner’s dilemma called the
trust game
.
In the game, you are given some money (say, $10) and presented with two options.
One option is that you can completely dictate how to divide the money between yourself and another person (you can take $9 for yourself and give that other person $1 if you want, because the other person has no say at all).
Alternatively, you can let the other person dictate the terms, giving the other person complete control over how to split the money.
If you choose to let the other player dictate the terms, the amount of money to be divided will be substantially larger (say, $30).
This means that if you let the other person divide the money, you could get a larger payout than if you choose to divide the money yourself.
Your choice in the game depends on whether you trust the other person.
Do you think the other person will be a malevolent or benevolent dictator?

DeBruine suspected that people’s choices would differ depending on whether they played the game according to the mistrusting psychology of market economics or the trusting psychology of family relations.
So at the beginning of the study, DeBruine took everyone’s photo.
This means that as you made your decision, you saw a photograph of the other player you were paired with, who was always a complete stranger.
DeBruine found that people were not especially trusting of the other person.
Even if they could make more money by letting the other person choose, people were generally unwilling to take that risk.
When gazing at the face of a stranger, people behaved
like employees at Bethlehem Steel, wary that this person might take their money and run.

But in another condition in the study, DeBruine morphed your photo with the photo of the other person.
As a result the other player looked like your long-lost relative.
Playing the game with someone who looked like a potential family member activated the kin-care subself.
Now, all of a sudden, people trusted the other person and gave him or her the opportunity to dictate the terms of the game.
In return, they got larger payoffs themselves.
Even though none of the participants realized that their own faces had been morphed into the other person’s, giving money to the other person was like giving money to a family member, because they were, literally, a part of that other person.

A FAMILY COMPANY

Even if it’s not very practical for you to start morphing photos of your employees and customers, the trust game study provides an important lesson: people will trust and cooperate more with others if they feel like they are part of a family.
This is exactly what happened at Southwest Airlines under longtime CEO Herb Kelleher.
As one former Southwest employee observed, “Rather than being a megacorporation with thousands of employees, Southwest is a large family with many members.”

Unlike CEOs in the rest of the cutthroat airline industry, Kelleher dealt his employees in on the corporation’s profits.
To further the familial atmosphere, Kelleher also installed rocking chairs throughout the corporate offices and encouraged employees to wear pajamas to work for a day.
After September 11, 2001, when the airline industry suffered a massive crash in business and most of the airlines resorted to massive layoffs, Kelleher appealed to the workers’ team spirit, asking them all to share a general pay cut to prevent the company’s having to start selectively firing other members of the family.
As a consequence, Southwest Airlines employees have never gone on strike, and
Fortune
magazine has frequently listed Southwest as one of the best places to work, as well as one of the most admired corporations in America.

Customers noticed the happier family feeling projected by Southwest employees and have been extremely loyal to the airline.
Ironically, by avoiding the cutthroat, profit über alles Wall Street approach, Southwest has been a financial success story, thriving during years when its competitors watched their profits disappear.

Southwest’s secret of success was, in essence, to activate the kin-care subself at work, inspiring unrelated people to treat each other like family.
This is a variant of the same principle used in the photograph-morphing study.
Southwest managed to psychologically morph all its employees into members of the same family.

Southwest Airlines is, of course, not a family; it’s a large corporation.
But its story indicates something important about your different subselves: they are flexible; they can be turned on and off to fit your current social context.
Although your trusting kin-care subself usually comes out when you are around relatives, it can be primed by appropriate circumstances.
And when it is running the show, your economic decisions will be more familial.
By encouraging employees to think of themselves as members of a big family, companies like Southwest are able to shift the rules of the game psychologically.

And the same thing can happen at an even broader societal level.
Martin Luther King Jr.’s “I Have a Dream” speech is full of images that encourage people of different races to think of one another as members of a common tribe—as fellow citizens living in the land of Abraham Lincoln, the US Constitution, and the Declaration of Independence—and even as members of a common family, making repeated reference to brotherhood and to children.
That speech has been repeated to generations of children in the years since Dr.
King gave it, and its familial imagery may have done more to improve race relations than all the laws passed to punish civil rights violations.