Author Archives: jroberthoffmann

The legacy of a master strategist

Click here for my article in The Conversation.

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Thomas Schelling (1921 – 2016)

 

My coordination game answers:

  1. Name a mountain: Mount Everest
  2. Name a flower: The rose
  3. Name a place to meet in London: Big Ben.
  4. Name one side of a Dollar coin: Heads.

Other coordination games Schelling experimented with include the following (taken from Schelling 1960, p. 55-56):

  1. Circle one of the numbers in the line below. You win if you all succeed in circling the same number.
    7     100     13     231     99     55

2. Put a check mark in one of the sixteen squares. You win if you all succeed in checking the same square:

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3. Write some positive number. If you all write the same number, you win.

4. Name an amount of money. If you all name the same amount, you can have as much as you named.

5. You and another person parachuted unexpectly into the area shown, each with a map and knowing the other has one, but neither knowing where the other has dropped nor able to communicate. Where do you meet?

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Most common answers: 1: 7 (the first) or 100. 2: top left. 3:1. 4: One million. 5: At the bridge.

 

Further reading

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Call for Papers: Behavioral Business Research and its Stakeholders

Special Issue in the Journal of Behavioral Economics for Policy

Guest Editors:

Submission deadline: May 1, 2017

Traditional research in economics and the other social sciences is sometimes criticized for questionable relevance to business and public policy, inability to prepare students for work or responsible citizenship, and as stymied by internal disciplinary divisions. Behavioral approaches have been touted as a way forward by unifying the social sciences based on the empirical facts of evolved human psychology that are relevant to the concerns of diverse stakeholders.

Business schools can nurture this process as forums where researchers from different disciplines, practitioners and students interact. However, misaligned incentives and differences in scientific conventions, epistemology and methods impede the emergence of a behavioral business discipline from economics, psychology and management.

This Special Issue is devoted to the case for, prospects and challenges of a unified behavioral business research that has public policy implications and/or enhances the skills of policy makers. Within this framework, topics of interest include discussions of whether and how behavioral approaches can be help to (1) integrate the social sciences which enhances public policy, (2) bridge the gap to business and public policy audiences, and (3) better serve students and their future employers.

Submission

We welcome submissions from researchers but also research stakeholders from the public, business and teaching arenas. Full papers submission should adhere to the Journal’s 3500 word limit but shorter, insightful comments are also invited.

Please use JBEP’s online submission system using “SI: Behavioural Business” as article type. Information for authors including author guidelines which also apply to the Special Issue can be found on the journal website. All submissions will be subject to standard refereeing.

Herbert Simon 100 today: the eyes have it

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One of my greatest acdemic heroes, the polymath Herbert Simon, would have been 100 today. In addition to his transformational contributions to economics, psychology, computer science and organisation theory, you can find rare gems in his autobiography. Here’s one of my favourites:

“As [Jacob Marschak] had assembled a spectacular group of stars in the Cowles Commission, I asked him what qualities he looked for in selecting staff. “Oh,” said he, “I pick people with good eyes.” I stared at him. Good eyes, what could he mean? I told him he was joking, but he insisted: He looked at their eyes.” And then I began thinking of the clear dark Armenian eyes of Arrow, the cool blue Frisian eyes of Koopmans, and the sharp black Roman eyes of Modigliani. It was certainly true that they all had remarkable eyes. Ever since, I think I have included that among my own selection criteria; intelligence shines through the eyes.”

 

Malaysian Chinese Fortune Telling

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Personal experience has always inspired my research. The four years I spent working in Malaysia are no different. My first culture shock was being exposed to the grotesque racial stereotypes that Malaysians of Malay, Chinese and Indian heritage peddle about each other quite openly (to experience this, all you need is to ride taxis there regularly). Malaysia is truly multicultural, but the dividing lines remain deep in all things except food. Required reading for any “expat” in Malaysia (a term seemingly reserved for white immigrants everywhere) was Tiziano Terzani’s remarkable A Fortune Teller Told Me, precisely because he illustrated the situation best:

The hotel’s owner and all the employees were Chinese. The only Malay was the doorman who carried the luggage of the guests who were also Chinese. After about two words of conversation he too started telling about the problem that divides Malaysia: race. `Look,’ he said with a sweeping wave of the hand. `The skyscrapers are Chinese, the market stalls are Chinese, the shops are Chinese, the supermarkets are Chinese … So tell me: is this Malaysia?’ Just then a motorcycle with a sidecar pulled up in front of the hotel. The rider took his helmet off and set to work. In the space of a few minutes he had turned the sidecar into a miniature restaurant […] The man was Chinese. Chinese were all the people I saw in the streets, busily running here and there with all sorts of errands. With such competition the poor Malay felt he would never get anywhere.

What is true in Malaysia holds for Southeast Asia generally: ethnic Chinese make up less than 10% of the total population of the region but own and control anything between half and three-quarters of the regional economy. Exact statistics on the fortunes of the Diaspora Chinese are hard to get hold of for obvious reasons: Chinese businesses tend to operate opaquely.

What could be the reason for the Overseas Chinese fortunes compared to other groups? Most social scientists accept that the biggest effective difference between peoples across the world lies more in their cultures than in their biologies. Ever since Max Weber many have therefore attributed the economic success of a people to the values they share. Weber thought that Protestantism, through frugality and hard work, was the engine of the success of Northern Europe and the USA.

The same logic was later applied to explain the rise of Japan and the Tiger nations (Taiwan, South Korea, Singapore and Hong Kong) after World War 2. Here the cultural explanation was (Neo-)Confucianism, in particular, its emphasis on frugality and, you guessed it, hard work. Ironically Weber himself, writing early in the 20th century, thought that Confucianism retarded the economies of the Far East. Nonetheless Confucian theories abounded in the latter part of the 20th century when globalisation made people in the West take note of other cultures. An endless stream of intercultural business manuals were the result.

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Economists are instinctively sceptical of anecdotal accounts and storytelling and prefer the analysis of cold, hard data. If culture was measurable one could use sophisticated statistical methods to find out whether it explains economic success. In the last 25 or so years questionnaire surveys have indeed been developed painstakingly and deployed to figuratively and literally map the cultures of the world.

In our own research we wanted to see whether we could use these measurements to attribute the differences in the economic fortunes of the three main ethnic groups in Malaysia to the differences between their cultures. We uncovered a mixed bag of evidence. For one thing , despite their ostensibly  different cultures and religions,  Malays,  Indians and Chinese in Malaysia are no different in their adherence to “Confucian” values. To put it another way, what many think of as Chinese Confucianism (conformity, respect for elders, tradition, collectivism) is not uniquely Chinese but rather common to Asian cultures generally. Because these values do not differentiate Malaysian ethnic groups they cannot explain economic differences between them either. What we found instead is that the Malaysian Chinese differ from the other two groups in a deep-seated mistrust of the state and a belief in private entrepreneurship. Perhaps a reliance on their own kind explains something else we found: Malaysian Chinese were more cooperative within their own ethnic group than either Malays and Indians.

As tempting and colourful as they are, cultural explanations have had their fair share of criticism. One is cultural determinism, a tendency to overlook other explanations such as the resources different peoples have due to their physical environments or institutions. Also, researchers sometimes use cultural explanations as a catch-all when all else fails, much in the same way as religion is often used. Cultural explanations are malleable and can be made to fit any fact until they lose scientific value (Karl Popper called this unfalsifiability). Another is a chicken-and-egg problem: are the values we observe the result or the cause of economic success? Perhaps changing economic fortunes cause and necessitate  value change.

A further issue with cultural theories is that people’s values are generally modest predictors of their behaviour: we often don’t practice what we preach. Perhaps a different cultural stereotype about the Chinese explains the popularity of Chinese culture theories. Western researchers interviewing Chinese businesspeople about the reasons behind their success may have overlooked an important fact: for the Chinese, pride in traditional culture is a cultural norm. Little wonder they offered it as an explanation even if it had no part in their success. Ambrose King and Michael Godley called this rationalistic traditionalism: a‘‘new kind of Chinese’’ with an ‘‘amazing willingness to split their personalities’’ and a ‘‘remarkable ability to move in and out of the two traditions’’. I, for one, also witnessed what Gordon Redding described:

One observes a present-day high-tech office full of well-qualified and highly efficient operatives of modern office equipment going through a feng-shui ritual to appease the spirits which control the fortune of the location.

There are cultural differences for sure, but it is hard to tell conclusively how and whether they explain the economic reality of the Chinese economic dominance in Southeast Asia. The Chinese to me remain, as in the cliché, inscrutable. And this even though some of my best friends are ethnic Chinese.

Odd science: electioneering

What’s wrong with this picture?

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Bernie Sanders at the Sunrise Cafe in Terre Haute

Terre Haute, or to be more precise the the small county it sits in, Vigo county, is the most accurate bellwether in the country. The people here have voted for the winning candidate in presidential elections more often than any other county in the United States in the past 120 odd years. To put it another way, if you want to be president, you’ve got to convince the people here. And you’ve got to convince these 11 women meeting for breakfast in the Crossroads Cafe.  (BBC The World Tonight 28 April 2016)

The Blair Faith Project

The former UK prime minister Tony Blair remains a controversial figure almost ten years after he left office, not least because of his role as one of the architects of the ill-fated invasion of Iraq in 2003. Improbably, Blair began his political retirement by repositioning himself as a peacemaker. He served as envoy of the so-called Quartet to bring peace to the Middle East. He also founded the Tony Blair Faith Foundation to promote inter-religious dialogue and converted to Catholicism.

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These ostensible contradictions made many wonder about Tony Blair’s stance towards religion. While in office, his press secretary Alastair Campbell famously stopped an interview with the Prime Minister stating, “We don’t do God”. Out of office Blair has more scope to express his personal views. In 2012 he resurfaced into the spotlight as a panelist at the Westminster Faith Debates with some insightful remarks regarding his personal faith and its role in his political decision making. We learned he never prayed with George W. Bush (as rumoured) but did pray alone before taking momentous decisions on UK military actions. I was part of the audience of (with?) Tony Blair that night and was particularly struck by two of his observations:

 

What I notice in the world today is two types of religious feeling … One is a religious feeling where your faith drives you to acts of compassion in the service of others and you see that across all the faiths, and the other is a feeling where faith becomes a badge of identity almost in exclusion to others.

Some background: The Westminster Faith Debates were organised by Professor Linda Woodhead as part of the Religion & Society research programme funded by the UK’s  Arts and Humanities Research Council, the Economic and Social Research Council and Lancaster University. I was part of one of the  projects funded by the programme. In our study we used experiments to examine the effects of two different dimensions of religion on a person’s social behaviour: the role of individual religious values or `religiosity’, and the role of someone’s particular religious group affiliation. In short, the way someone treats others may depend on how strongly religious the person is, but also on whether these others are of the same or of a different religious community. We found, as Blair suggested, these two dimensions of an individual’s religion have their own effects. Later in the debate Blair made another telling remark:

I find a connection with people who are of faith, even though a different faith to my own, precisely because there is a certain space, intellectually, philosophically and emotionally, that we can congregate around.

I call this the Blair Hypothesis: essentially he suggested that one’s religiosity in itself can be a group identity, irrespective of which religious faith one belongs to. It suggests that highly religious people from two different religious groups may have more in common than do a staunch believer and a mere passenger within the same religion. We tested the Blair hypothesis in our experiment and found support: more religious participants of any religious denomination believed more strongly (than less religious ones) that highly religious others of any religious group can be trusted. In short, there is stronger trust among highly religious people no matter what particular faith groups they belong to.

Our paper has a number of other results, such that more religious people tend to attach more significance to what social groups others belong to: more highly religious people discriminate more against those of other social groups and also show greater favouritism towards those of the same faith. Surprisingly, neither our  own nor other people’s study find support that religiosity in its own right makes people kinder towards others, like the proverbial Good Samaritan.

Experimenting with the Intentional Stance

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Why do people leave a tip on the table even if they leave a restaurant unnoticed, in a place they will never visit again with no further interactions with the restaurant and its staff?

One reason lies in social preferences, such as an altruistic desire to reward a waiter who gave good service.  Economists tend to distinguish pure altruism (acting only out of concern for others) and impure altruism (acting out of the “warm glow” feeling none gets out of being charitable). In practice both motivations are at work together when, for example, one gives to charity. You may desire to help others but also enjoy feeling good about yourself for having done so. Social preferences have been widely studied by economists.

A different possible motivation behind tipping in the example above (and many similar cases) is “perceived intentionality”, our awareness of the waiter being a purposeful, intentional human being rather than a robot, irrespective of our motivation to reward him. When the other party has intentions we tend to treat it differently from unintentional forces, such as nature or machines. The restaurant guest who leaves without tipping feels shame when contemplating the waiter’s later disapproving reaction. Jean-Paul Sartre described this as “the gaze”: hell indeed is other people.

I have just glued my ear to the door and looked through a keyhole […] But all of a sudden I hear footsteps in the hall. Someone is looking at me […] I see myself because someone sees me […] Shame is by nature recognition. I recognise that I am as the Other sees me […] thus shame is shame of oneself before Others.
Jean-Paul Satre, Being and Nothingness

In our recently published experiment we wanted to tell apart social preferences and perceived intentionality in situations where our participants made decisions that affected others. In the experiment our participants could act either kindly or nastily in strategic games against three kinds of “others”: (1) human others who received money when participants played kindly, (2) human others who did not receive any money either way and (3) computer programs. The difference in the way participants treat (1) and (2) is down to social preferences, the difference between (2) and (3) is due to perceived intentionality. We used this latter difference to show that people act to avoid the disapproval of others irrespective of social preferences. They treat humans in (2) more kindly than computers in (3) presumably to avoid raising the humans’ ire (computers do not receive much sympathy from anyone although I have seen otherwise rational people argue and fight with them). We thus find evidence for disapproval avoidance: Our conclusion is that “a guest may tip the waiter not (only) out of concern for his income but to avoid the psychological cost of contemplating his resentment.” Philosopher Daniel Dennett calls this  the Intentional Stance.

This idea also explains findings in other experiments where simply presenting an image of eyes makes participants more pro-social, for instance in putting money in a donation box:

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(There are apparently people immune to the gaze. Oxford don (and later Vice Chancellor) Maurice Bowra covered only his face when spotted sunbathing in the nude by a group of female students saying, “in Oxford I am known by my face”.)