Trading emotions:

Trust and rules after

50,000 years ago
Larry Baum
CCGL9042: Evolution of Civilization
Lecture 3

Music 1 Music 2
Main points of this lecture

o Trade
• began >50 ka ago.
• co-evolved with “virtuous” behaviors.
• co-evolved with “virtuous” institutions and rules.
The roots of prosperity

https://commons.wikimedia.org/wiki/File:CSCL_Globe_(ship,_2014)_001.jpg

› Comparative advantage: trade benefits both

parties.
› Leads to specialization David
Ricardo
› Common in prosperous modern societies 1772-1823
› How did trade evolve?

https://en.wikipedia.org/wiki/File:NASSA_Group_AJ_Super_Garments_LTD._RMG_production_line.jpg https://commons.wikimedia.org/wiki/File:CSCL_Globe_(ship,_2014)_001.jpg https://commons.wikimedia.org/wiki/File:InsideWalmartWestPlains.JPG

Evolution of VIRTUES
The ultimatum game
o Two players, say Ann and Jill, are
involved in the ultimatum game:
§ Ann is given some money.
§ Ann must offer Jill X% of the money.
§ If Jill rejects, no one gets money.
§ If Jill accepts, Jill gets X%, and Ann gets the rest.
§ Ann & Jill can’t discuss.

o Take a quiz: https://play.kahoot.it/v2/?quizId=a0b424c0-a873-478f-8fda-abf064c02e4a

o Class discussion
§ Why did you (as Ann) offer the amount you did in the quiz?
§ And why did you (as Jill) require the amounts you did?
People act…surprisingly nicely
› To get the most money (“rational” behaviour),
what should Jill accept?
› Realising this, what should Ann offer?
› Surprisingly, people often split almost evenly.

“The lesson of the ultimatum game… is that… people

emerge from such experiments as nicer than you
think. But the even more surprising lesson is that the
more people are immersed in the collective brain of
the modern commercial world, the more generous
they are. As the economist Herb Gintis puts it,
‘societies that use markets extensively develop a
culture of co-operation, fairness and respect for the
individual’”
https://commons.wikimedia.org/wiki/File:Children_sharing_a_milkshake.jpg
 Wait. Are they really nice?
o If Ann offered you $5 out of $100, how would you feel?
§ Raise your hand if you’d accept.
§ As Ann, you’d realize that. How could you
prevent rejection?
o Thus, a “nice” offer by Ann may really be
selfish, out of fear.
o Test by changing the game:
§ Dictator game
─ Jill must take Ann’s offer. What would you offer?
─ Ann offers almost as much as before! Why?
§ Blinded dictator game
─ Anonymous players. What would you offer?
─ Player 1 offers very little! Why?
o Thus, people not only nice, not only afraid,
but image-conscious.
o Trustworthiness facilitates trade.
Doing good by being selfish?
• So people may be selfish but still do good:

“by directing that industry in such a manner as its produce

may be of the greatest value, he intends only his own gain,
and he is in this, as in many other cases, led by an invisible
hand to promote an end which was no part of his intention.
Adam Smith Nor is it always the worse for the society that it was not part of
1723-1790
it. By pursuing his own interest he frequently promotes that of
the society more effectually than when he really intends to
promote it. I have never known much good done by those
who affected to trade for the public good.”

• Self interest creates public good through trade.

• But what about social enterprises?

• What about charity or altruism (benefitting someone else)?
Altruism in nature
• As with humans, individuals of other species may help each other, sometimes
even in different species. • But sometimes social insects and
other animals help others of their
own species with no apparent
benefit to themselves.
o This seeming altruism looks
inconsistent with evolution.
o Why does it occur in some social
insects and other animals?

Workers helping the queen reproduce

 The selfish gene
› Selfish genes may explain
altruistic organisms.
› To survive and reproduce,
genes “encourage” behaviors
that maximize their copies.
› Relatives of an organism carry
its genes.
› Self-sacrifice to help relatives
survive helps the genes of an
Richard Dawkins
1941- 1976
organism spread.
Genes in relatives
Hamilton’s rule
An action benefits one’s gene if C < rB

C = cost to self (in fitness)

B = benefit to others (in fitness)
r = genetic relationship

William Hamilton In other words, we do whatever makes it most likely

that our genes will spread.

Haldane was prepared to lay down his

life for eight cousins or two brothers.
https://quoteinvestigator.com/2016/05/05/brothers/

JBS Haldane
Hamilton’s rule
For example, a female lion with a
well-nourished cub may follow
Hamilton’s rule by nursing a
starving cub of a full sister because
the cost to herself in terms of cost
to survival of herself and her own
cub (C) is less than her relatedness
with her sister’s cub (¼) multiplied
by the benefit it gets (B).

https://www.flickr.com/photos/lamsongf/2270882580
 Hamilton’s rule
For example, Karl would sacrifice his life to save his grandmother, 2 nephews, and
his sister, but wouldn't sacrifice his life for 7 cousins. Why? Because his relatedness
with his grandmother, 2 nephews, and his sister is !⁄" + 2× !⁄" + !⁄# = 1 !⁄", but his
relatedness with 7 cousins is 7× !⁄$ = %⁄$.

https://www.morningowlfineart.com/blog-San-Diego-Photographer/why-to-have-a-socal-extended-family-session-photographer
Hamilton’s rule
The Trolley Problem is a
hypothetical ethical dilemma
in which you must choose
between a trolley killing
different groups of people. By
Hamilton’s Rule, the 3 groups
shown here may have equal
value.

https://www.instagram.com/p/CosDHgtyhCw/
Hamilton’s rule
Superman saves lives.

But this Superman is not willing to

risk anything for non-kin.
https://www.instagram.com/p/CLGw_hqjS33/
 The tragedy of nepotism
› Instead of sharing:
§ Dictators hand jobs, wealth, and
power to their relatives.
§ Rich pass wealth to their children.

https://bit.ly/2S3CyF0 › On the other hand:

§ Trying to break family ties to
create equality causes suffering.
§ https://youtu.be/kHA8WgTYt1Q
(2:51, Children of the Sun, 2007)

https://bit.ly/2k34p49
https://bit.ly/2FLm7H3

Property of the son of the dictator of Equatorial Guinea (3rd biggest

African oil producer, but one of the world’s lowest life expectancies)
Reciprocal altruism
• Why altruism towards strangers?
• Reciprocal altruism?
o Be altruistic now.
o Enjoy reciprocation later.

“Each individual human is

seen as possessing both
altruistic and cheating
tendencies…” The Evolution
of Reciprocal Altruism

Trochilus bird cleans the mouth

Robert Trivers of a crocodile. The bird gets
1943- food and the croc gets cleaned.
Selfless giving Live kidney donors
(US, 2014)

Anonymous

Friend, partner

Paired

Other relative

› People give a kidney to people… Sibling, child,

• closely related: Hamilton’s rule parent
• close socially: reciprocal altruism 0 1000 2000 3000
• sometimes more distant or anonymous https://www.kidney.org/news/newsroom/factsheets/Organ-Donation-and-Transplantation-Stats
Selfless giving

› People give money to people…

• sometimes related or for reciprocal altruism.
• sometimes unconnected, to feel good.
https://www.nature.com/articles/s41467-019-11852-z
Altruism
o People often help people with
no genetic or social
connection.
§ Donating to charity
§ Giving time/money
anonymously
o Why?
§ Once generosity evolved, it
sometimes makes us feel good
to help even without
reciprocation.
§ Good for people
§ But not important for trade
Prisoner’s dilemma
§ Try to model cheating and cooperation with a game.
§ Police separately question 2 criminal partners.
§ 2 actions one partner could take:
› Cooperate with partner by lying to police that he is innocent.
› Defect against partner by telling police he is guilty.
§ Other partner also has those 2 options.
Prisoner’s dilemma
§ There are 4 possible combinations of actions:
Partner 1 Partner 2 Partner 1
action action punishment
Combination 1 Cooperate Cooperate 1 week prison

Combination 2 Cooperate Defect 20 weeks prison

Combination 3 Defect Cooperate None

Combination 4 Defect Defect 5 weeks prison

§ You can think what the rational (selfish) strategy would be.
Iterated prisoner’s dilemma
• Repeated version
• What’s the rational strategy?
• It’s complicated.
• Cooperation can emerge.
• TIT-FOR-TAT
Robert Axelrod 1. Cooperate on 1st turn.
2. Copy opponent thereafter.
§ Often most successful strategy (how
to test?)

http://www-ee.stanford.edu/~hellman/Breakthrough/book/pdfs/axelrod.pdf
Evolutionary simulation
o Evolutionary simulation
• Success of a strategy in each round
determines its frequency in the next
round.
• TIT-FOR-TAT won.

o Effective properties of TIT-FOR-TAT

• Nice: Start with cooperation.
• Retaliatory: Defect after opponent
defects.
• Forgiving: Cooperate when opponent
resumes cooperation.
 Generosity and guilt
§ Add noise
› More lifelike
› Random defections set off vicious
cycle of retaliation.
§ Modify TFT to break vicious cycles
› Generous TFT: cooperates a certain
proportion (e.g., 10%) of the times that
it would otherwise defect.
› Contrite TFT: cooperates when
opponent defects as retaliation of its
own random defection.
Wu and Axelrod (1995), Journal of Conflict Resolution
 Conditions for cooperation
§ TIT-FOR-TAT success in society needs 4 Re:
› Repeating interaction
› Remembering people
› Recognizing cheating
› Rewarding cooperation
§ 4 Re likely common for early humans.
§ Natural selection for TFT behaviors
› Trust
› Fairness
› Generosity
› Retaliation
› Forgiveness
› Guilt
Emotions for cooperation

› Some emotions evolved for

reciprocal altruism and trade?
› Trust: to believe the person will
not cheat
› Suspicion: to not be cheated
› Anger: to deter cheating
› Guilt: to re-establish cooperation
› Forgiveness: to re-establish
cooperation
› Evolution optimizes their balance.
Homework
o At home, listen to a podcast on Tit for Tat—only the last 23’:
https://www.wnycstudios.org/podcasts/radiolab/episodes/103951-the-good-show (39:56-1:02:20)

o Optional videos on the prisoner’s dilemma:

o https://www.youtube.com/watch?v=t9Lo2fgxWHw (5:44)
o https://www.youtube.com/watch?v=BOvAbjfJ0x0 (9:58)
 Partial summary
› Self-interest: motivates behaviour, due to
evolution.
› Altruism: toward relatives, due to selfish
genes
› Reciprocal altruism: toward unrelated
people, for mutual benefit
§ Iterated prisoner’s dilemma game
1. Emotions for cooperation evolved.
2. Trade possible
3. Prosperity
4. Repeat
SOCIETAL
Conditions for
Trade
 Trust
§ Trust raised further by culture,
institutions and rules.
Everything on a larger scale.
§ Good (proper trust)
› Cooperation over space
› Cooperation over time
§ Bad (too much trust)
› Corruption
q Rich buy privileges.
q Powerful impose privileges.
› Laziness
q Larger scale frauds
q 2007 loan crisis
› World war
Ownership

§ Ownership needed for trade

› Raw materials
John Locke
› Tools 1632-1704

› Products

› Money
“Government has no other end,
but the preservation of property.”
Ownership vs. sharing
› Does everything need to be
owned?
› What are some things usually not
owned?
. › Why not free-for-all?
Sharing › Ways to prevent overuse
of common resources
o If something’s free, will you take it? § Ownership
o Tragedy of the Commons § Law
› Examples?
› Similar
to prisoner’s
dilemma
§ Individuals tend to do what’s
best for themselves.
§ That may be bad for the
group, and thus bad for
individuals in the long run.

No Recovery for Atlantic Cod Population, by Cassandra Brooks 2008

 Law
› Not too little
“Little else is requisite to carry a state
§ Tragedy of the commons to the highest degree of opulence
§ Monopoly from the lowest barbarism but
peace, easy taxes, and a tolerable
§ Theft administration of justice”
§ Poverty
› Not too much
§ Taxes
§ Bureaucracy Adam Smith
§ Protectionism 1723-1790
 3M facilitate trade

› Money: a handy medium for

exchange
› Markets: a place for many
producers to meet many
consumers to multiply choices
› Middlemen: matchmakers to
help producers connect with
consumers beyond markets
 International markets

› Worldwide markets enhance trade.

› But countries often restrict imports.
§ Why?
§ How?
› Losers
§ The Real Cost of Free Trade by
Operation Maple
§ https://www.youtube.com/embed/ok
qYDveXHX8?start=0&end=379 (6:38)
› Winners
§ Does Free Trade Exploit the Poor? by
John Stossel
§ https://www.youtube.com/embed/ZO
2-XRQ4r-0?start=2&end=390 (6:34)

https://people.hofstra.edu/geotrans/eng/ch5en/conc5en/worldexports.html
Inequality

https://ourworldindata.org/global-economic-inequality
Inequality in the last few decades

› Decreased globally
§ As poor countries developed
§ Particularly China
› Increased within some poor countries
§ Some people reached global middle class.
§ But not everyone.
 The non-winners

https://www.youtube.com/embed/t1
mWp2qp7A0?start=0&end=396 (6:55)

http://www.bloomberg.com/news/articles/2016-06-27/get-ready-to-see-this-globalization-elephant-chart-over-and-over-again
 The non-winners
Does free trade hurt workers in rich countries?

Yes No
• Elephant graph: their incomes froze • Prices: fell
• Factories: from rich to poor countries • Elephant graph: misinterpreted

https://commons.wikimedia.org/wiki/File:BMK_factory_-_geograph.org.uk_-_757146.jpg

http://www.resolutionfoundation.org/app/uploads/2016/09/Examining-an-elephant.pdf
Summary

› Emotions that facilitate cooperation, including trust,

have co-evolved with trade.
› Societal trust, protection of ownership, and laws
help trade.
› Trade has benefitted most people in the world.
Preparation for next lecture
› Watch this video to prepare for the next lecture:
https://www.youtube.com/watch?v=HucSCNQ01X4 (10:04)
The End