‘Utmost Good Faith’ Between Adversaries?

Not much has yet been written about the quasi-adversarial relationship that obtains between consumers and the companies from which they buy goods and services, at least not in those terms.

And it’s clear, I think, that the relationship is quasi-adversarial. In game-theoretic terms, it’s a ‘mixed motive’ game — one in which cooperation of some form is useful, but in which each party has some incentive to deviate from maximally cooperative behaviour. When Apple sells me a computer, they would ideally like to squeeze as much money out of me as possible, while giving me a product as cheap-to-produce as possible. And my own preferences are the exact opposite. We both benefit from doing business together, but our interests in the interaction are not quite aligned. In fact, in terms of pure dollars and cents, the transaction between Apple and me is a zero-sum game: every extra dollar they charge for their computer is a dollar out of my pocket and into their corporate coffers. It’s not a fully-adversarial relationship, but it’s still one that needs some rules to keep it civilized.

In this regard, it’s good to know about the legal concept of uberrima fides. This is a legal doctrine, relating specifically to insurance contracts, which says that “all parties to an insurance contract must deal in good faith, making a full declaration of all material facts in the insurance proposal.” The relationship between insurer and insured, in other words, is a game that must be played by very strict rules.

The concept of uberrima fides doesn’t mean the insurer and insured are on the same team, metaphorically speaking. So it implies a relationship quite different from, say, a fiduciary one. A fiduciary relationship, as a famous legal judgment once put it, requires “the punctilio of an honor the most sensitive.” In a fiduciary relationship (e.g., the relationship between lawyer and client), the commercial aspect of the relationship takes a back seat, and one party (e.g., the lawyer) is expected to put the other party’s interests ahead of their own. In a relationship subject to the uberrima fides standard, the relationship is still at least partly adversarial, but the adversaries in question are expected to play very strictly according to the rules. This makes particular sense for the relationship between insurer and insured, presumably, because both parties are so highly vulnerable to gamesmanship and dissimulation on the part of the other.

This suggests, I think, that we think of various kinds of buyer/seller relationships as existing along a spectrum, from the aggressively adversarial to the utterly fiduciary. The question, then, is not which rules should apply to buyer/seller relationships in general. The question, rather, is which rules should apply to what kinds of buyer/seller relationships, and why.

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2 responses to “‘Utmost Good Faith’ Between Adversaries?

  1. Hi– what an interesting post. Regarding your concluding suggestion about “a spectrum” of “various kinds of buyer/seller relationships,” ranging from those depending on shared trust, honesty, or honor to those that permit participants to entertain manipulative, deceitful, or predatory motives, who decides the rules for which kinds of buyer/seller relationships, and who decides whether or not one has to follow them? Also, I wonder how the potential or the fact of an “aggressively adversarial” relationship affects participants’ abilities to conceive or abide by rules. Lastly, I wonder in particular about the businesses of marketing or “branding,” as it sometimes seems to be called (if branding is a subset of marketing): is it possible for these businesses to be anything other than adversarial– focused solely on conquest? Adversarial: it stems from the Latin vertere, “to turn, change, overthrow, destroy.” From that we get adversary, advertising, and verse. So much depends on how one interprets one’s position in regard to the line, the law, the right, and the job description, it seems.

  2. Joanie:

    Thanks for your comment.

    As to your first question, about “who decides,” I think the answer is complex. In some cases, the law has determined that a certain game (e.g., the one between insurer and insured) will be played by very strict rules. Presumably that’s because so much is at stake, and mutual deception is otherwise very easy. In other contexts, the rules of the game (to the extent that they are understood by all involved) are better seen as consisting in a social convention, a kind of social equilibrium.

    As for adversarial contexts: well, this whole blog is predicated on the idea that there are kinds of interaction that are by definition adversarial, in some cases because systems are *designed* to take advantage of the benefits that an adversarial attitude brings. (Quick examples include the way spectators benefit from watching two football teams clash, and the way computer users benefit from the way Apple and Microsoft compete to provide better and better software.)

    Chris.

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