The Strategic Role of the Emotions Summary

A Simple thought Experiment:

1. You want to open a second outlet of your store

2. You cannot manage the store yourself, and neither can you tell if the manager you hire will
cheat you
3. You can afford to pay the (honest) manager twice the going rate, £100,000, ans still earn
£100,000 profit
4. A dishonest manager will earn £140,000, causing you to lose £10,000
5. Again, no way to know if the manager is cheating you, or if the store is just unsuccessful
6. Would you open the store?

Theory:

 You’ll open the outlet only if your expected net gain is positive
 Theory assumes narrow self-interest by hired agents
 If true, bottom path of b would be chosen – decision would be to not open the outlet
 Tom Schelling ‘Commitment Problem’
o not opening the outlet is a worse outcome for both
o if new manager could prove commitment to manage honestly, she would want to
A Second Thought Experiment:

1. you have just returned from a crowded concert

2. you have lost £10,000 in cash in an envelope with your details on
3. do you know anyone not related to you by blood or marriage that would return the
envelope?

Theory:

 Most respond yes, what makes them so confident?

 Adam Smith, David Hume, and most people – a friend would feel terrible at the thought of
keeping the money, knowing it’s yours - sympathy
 For emptions like sympathy to solve commitment problem they need only to make expected
probability of cheating sufficiently low
 Some have said mimicry would prevent credible signs of sympathy emerging
 Evidence however, suggests people are good at making predictions on other actions
 Frank, Gilovich, and Reagan – subject who had only interacted for 30 minutes were able to
predict who would defect in prisoner’s dilemmas at twice chance rates of accuracy

Natural Selection:

 first step in evolution of signalling is problematic as the first instance of this would mean
nothing to observers – costs for the signaller but no benefits
 Darwinian theory states that any mutation must create an immediate surplus of benefits to
survive
 How do signals originate then? Chance
 Dung Beetle Example:
o Dung beetles avoid predators by resembling the dung on which they feed
o How did they come to resemble dung?
o Problematic because the first minor mutation in direction of the resemblance of
dung would only work if the creature already looked enough like dung to fool
predators
 If sympathy and related emotions were favoured in their earliest stages, they must have
offered some other benefits – parenting? Self-control devices?
 Parenting
o problematic as it is very easy for even simple animals to distinguish between kin and
non-kin
 Self-control devices – promoting rational decision making
o discounting future values exponentially is rational, decisions made now will still
seem best in hindsight
o however, George Ainslie, evidence suggests that all creatures discount
hyperbolically – temporary preference for the poorer but earlier of two goals, when
the earlier is close at hand
Repeated Social Dilemmas:

 Tit-for-Tat
o a game in which two parties cooperate for the first turn, and then (ideally) mimic the
previous reaction of your partner each successive turn after that.
o Defecting generates a large benefit for that turn, but you will incur a cost the next
o The cost is such that a game that degrades to a repeating pattern of defecting and
not defecting, generates a long run earning of less that that what would be earned
from both sides never defecting
 Benefits of defecting are immediate and as such may seem to be favourable if hyperbolic
discounting is present
 Emotions such as sympathy would perhaps prevent this due to the added psychological cost
of defecting from an agreement with one’s trading partner
 Ease of implementing tit-for-tat properly may have provided some evolutionary benefits

Signalling:

 Once markers of sympathy could be recognized my multiple members of a community,

natural selection could refine them for signalling purposes
o Bruell – individual differences in emotional responsiveness are heritable
 If selective trustworthiness is beneficial, natural selection would promote it.