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Shall We Dance? Taxes, Tipping, TV, and Trust. Coordination in a Complex World coordination problems - how best to maneuver around campus?, feed UR students?,

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Presentation on theme: "Shall We Dance? Taxes, Tipping, TV, and Trust. Coordination in a Complex World coordination problems - how best to maneuver around campus?, feed UR students?,"— Presentation transcript:

1 Shall We Dance? Taxes, Tipping, TV, and Trust

2 Coordination in a Complex World coordination problems - how best to maneuver around campus?, feed UR students?, etc. How can people voluntarily make their actions fit together in an efficient and orderly way? - one way to solve them is by authority or coercion, which is unappealing. “In a liberal society, authority (which includes laws or formal rules) has only limited reach over the dealings of private citizens, and that seems to be how most Americans like it.” bottom-up, voluntary solutions are preferred (e.g., the “El Farol” problem)

3 Coordination in a Complex World “Schelling Points”: salient landmarks or “focal points” upon which people’s expectations converge. Why important? (1)They show that people can find their way to collectively beneficial results not only without centralized direction but also without even talking to each other. (2)The existence of “Schelling points” suggests that people’s experiences of the world are often surprisingly similar, which makes successful coordination easier. - Conventions not only maintain order and stability, they reduce the amount of cognitive work you have to put in to get through the day. - Conventions allow us to deal with certain situations without thinking too much about them, and when it comes to coordination problems in particular, they allow groups of disparate, unconnected people to organize themselves with relative ease and an absence of conflict. (p. 93) - (In short, they reduce dramatically the number of choices individuals have to make on a daily basis = they help to reduce the “Paradox” or “Paralysis of Choice”).

4 Invisible Norms/Conventions/Social Dictates that Regulate Human Behavior without Centralized Control and that Go Largely Unnoticed “Excuse Me. May I Have Your Seat?” Yoni Brook/The New York Times In 1975, students asking for another rider's seat on the subway felt queasy breaking the “first- come-first-served” code. Three decades later, the experience is just as daunting. Dr. Stanley Milgram, who planned the experiment, in Milgram’s idea exposed the extremely strong emotions that lie beneath the surface of otherwise normal, everyday life. The study showed how much the unwritten rules of society save us from chaos through coordination and cooperation.

5 Society Does Exist: Taxes, Tipping, TV, and Trust “There's no such thing as society,” British Prime Minister Margaret Thatcher once famously declared. “There are individual men and women and there are families.” “Society,” therefore is nothing more than individuals (and families) always and only seeking their own self-interest or to maximize their own utility in each and every human interaction…it’s more rational to “free ride.” If that is true, then how do we explain, among other examples: (1) the Richard Grasso affair, (2) tipping while away on vacation, (3) the ultimatum game, (4) the success of eBay and Amazon.com, and (5) anyone paying their income taxes.

6 Society Does Exist: Taxes, Tipping, TV, and Trust Answer: Cooperation through trust and a sense of fairness “prosocial behavior” and “strong reciprocity” by which the group benefits. (e.g., Capuchin monkey experiments) The key to cooperation is the “shadow of the future” or the opportunity to punish free-riders and trust-abusers: (eBay, Amazon, tax audits, Honor System at UR) * capitalism’s success and superiority over any other economic system * - the realization that the accumulation of capital over the long-term, versus the short-term, is actually in everyone’s self-interest! “Capitalism is healthiest when people believe and behave on the realization that the long-term benefits of fair dealing outweigh the short-term benefits of ‘sharp’ or shady dealing.”


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