Category Archives: institutional design

Incentives and Rules: Constraints on Individual Autonomy

Posted by KevinJ

In adversarial institutions there are always “rules of the game.” In fact, these rules largely define the institution itself. If you play a game that looks sort of like baseball, but has four strikes and three balls, you are not playing baseball. In adversarial ethics we care about both how to design and evaluate the best rules; and also about what obligations “players” in that institution might have over and above those spelled out in the rules.

But surely there are many different kinds and categories of rules, and we could sharpen our normative theories by distinguishing some of them. Does it matter, for example, whether rules dictate what actors must do or must not do, on the one hand, or whether the rules are structured through the use of incentives to do or refrain from doing certain things, on the other? In a brand new book entitled Strings Attached: Untangling the Ethics of Incentives, Ruth Grant (professor of political science at Duke University) challenges a number of our standard assumptions about the use of incentives in public policy about markets and other domains.

It is commonly assumed, for example, that incentives leave the decision-maker with a free, or autonomous, choice between several options. Of course, even if all autonomous choices are voluntary, not all voluntary choices are autonomous. When given the choice between your wallet or your life, you voluntarily decide to hand over your wallet. But was the choice was not made autonomously.

The same argument could be made for properly created incentives; they place the player in a situation where only one choice is rational. The player voluntarily selects the rational choice, but may not be as autonomous as we would like to believe. Ruth argues that “Incentives ‘strictly speaking’ are a particular kind of offer: (1) An extrinsic benefit or a bonus that is neither the natural or automatic consequence of an action nor a deserved reward or compensation; (2) A discrete prompt expected to elicit a particular response; and (3) An offer intentionally designed to alter the status quo by motivating a person to choose differently than he or she would be likely to choose in its absence.” With each of these qualities, decisions are reached that are not “natural” to the individual.

The upshot: the use of incentives to get someone to do something they didn’t want to do may not be as innocent or uncoercive as we generally assume.

But how do incentives within institutions differ from other kinds of rules and regulations? They both adjust the balance of the costs and benefits of a particular choice and aim to alter an actor’s course of action. Incentives and other regulations may lead to the same end-result — but do incentives do this in a way that is less coercive or more voluntary? Ruth’s answer is: it depends! She looks at a wide variety of incentives used in public policy, and we have different “gut” reactions that are often confirmed by closer ethical analysis. Some we feel perfectly free to take or leave (say, an incentive to file tax returns on time) and some (say, a plea offer to a risk-averse and poor accused man who is in fact innocent) can feel coercive, exploitative, or like abuses of power or authority.

I can’t induce you to read Grant’s thought-provoking and highly readable new book. But I’m pretty sure you will never again assume that incentives are necessarily more freedom-enhancing alternatives to other forms of regulation and rules.

David Brooks on Linsanity and the difference between the morality of religion and sports

Posted by Wayne

David Brooks, the New York Times‘s supposedly conservative columnist, regularly looks to sports as a way of making sense of our political and popular culture. This week he used the Jeremy Lin phenomenon as a pretext for some reflections on the gap between the ethos of sport and the ethos of religion (because Lin, like Tim Tebow, is a devote Christian). For Brooks the gap is a chasm that can probably not be fully or safely bridged.

The discussion is relevant for this blog because Brooks claims that the “sporting ethos pervades modern life and shapes how we think about business, academic and political competition.” Our ethical thinking in certain adversarial contexts or institutions will — and ought to — differ from the way we think ethically in other parts of our lives, even if we are deeply religious.

The moral universe of modern sport is oriented around victory and supremacy. The sports hero tries to perform great deeds in order to win glory and fame. It doesn’t really matter whether he has good intentions. His job is to beat his opponents and avoid the oblivion that goes with defeat.

The modern sports hero is competitive and ambitious. (Let’s say he’s a man, though these traits apply to female athletes as well). He is theatrical. He puts himself on display.

He is assertive, proud and intimidating. He makes himself the center of attention when the game is on the line. His identity is built around his prowess. His achievement is measured by how much he can elicit the admiration of other people — the roar of the crowd and the respect of ESPN.

His primary virtue is courage — the ability to withstand pain, remain calm under pressure and rise from nowhere to topple the greats.

This is what we go to sporting events to see

Brooks identifies this ethos with “modern sports,” but take away the inclusion of female athletes and ESPN, and the description of the virtues, goals, motivations, and glories of the athletic hero (or warrior) would not have looked out of place in Ancient Greece or Rome.

Of course, it is easy to see why these qualities are troubling for adherents of many traditional and religious moral traditions in the West and East. A “moral hero” in these traditions would not be described in any of the ways I have emphasized in bold font in long quotation from Brooks. (Although he or she would, presumably, be just as courageous as the sporting hero, even if this was not his or her primary virtue.) Brooks himself goes on to paint a similar broad-brush portrait of the religious life, and explains why he thinks the sporting and religious characters can never be fully reconciled. Following the Jewish theologian Joseph Soloveitchik, Brooks believes

that people have two natures. First, there is “Adam the First,” the part of us that creates, discovers, competes and is involved in building the world. Then, there is “Adam the Second,” the spiritual individual who is awed and humbled by the universe as a spectator and a worshipper.

Note that Brooks is focusing almost entirely on one component of a moral or ethical perspective — the part that concerns virtues or characters traits. But we also care about what rights, freedoms, and duties people have; and with the how to design just institutions (which will, in turn, assign various rights and duties to individuals occupying particular roles). So we might also ask whether the rights and duties of “players” in deliberately adversarial institutions will necessarily conflict with the dictates of a religious follower’s conscience.

Here too the answer seems to be Yes, but for very different reasons than the ones Brooks has highlighted. The best summary I know of for this case comes from Joseph Heath‘s important paper in the Journal of Business Ethics, “An Adversarial Ethics for Business: or When Sun-Tzu Met the Stakeholder” (2006). Here is how Heath sums up an argument explained over several pages:

Much of everyday morality has as its goal the prevention of a collective action problem. It is possible to secure certain advantages by lying, but if everyone did it, no one would believe what anyone said, and everyone would be worse off… This is why the… Golden Rule capture[s] much of the spirit of everyday morality. But because the central mechanism in a competition is an unresolved collective action problem, there are bound to be numerous prima facie conflicts between competitive imperatives and those imposed by everyday morality. This is reflected in the fact that a naïve or mechanical application of the Golden Rule in a competitive situation is likely to generate the wrong results. Before kicking the winning field goal, we do not want football players to be thinking, “How would I like it if the other team did that to me?” Similarly, before lowering prices, we do not want the gas-station owners to be thinking “How would I like it if the station across the street did that to me?”

The bolded phrase is the key to understanding the reason we actively encourage a different kind of ethical thinking or ethos in what we are calling deliberately adversarial institutions (like sports, markets, and democratic politics). These institutions regulate a competition in order to create benefits for “non players” outside the competition — what economists call “positive externalities.” So in all of these institutions we deliberately prevent the competitors from cooperating in ways that will be to their advantage but not to the advantage of outsiders.

Traditional morality is about cooperating and mutual assistance: adversarial ethics is about how to generate social benefits by preventing certain forms of cooperation; but also about how to make sure that the players use only appropriate tactics in their attempt to succeed. Heath’s article is as good a place as any to see the outlines of, and tensions between, these two features of adversarial ethics. But you should also find these tensions in almost every case study we highlight on this blog.

Incidentally, Heath’s article could be of some service to pious, but ferociously competitive athletes like Tim Tebow or Jeremy Lin. They can play hard to beat their opponents, but show self-restraint in doing so by embracing the “spirit of the rules” and by treating their opponents with respect. And of course, they can and should be as cooperative and humble as possible with their own team mates. Within the team itself, there is still no “I” in Golden Rule.

Conflict and Creativity: The Myth of Brainstorming

In a recent New Yorker article, Jonah Lehrer debunks the myth that a conflict-free brainstorming session is the optimal environment to start the flow of creative juices.  ‘Brainstorming’ is a method that was popularized by the Mad Men era B.B.D.O partner Alex Osborn (1948), with the publication of his book, Your Creative Power.  Osborn posits that this method was integral to his firm’s success, and, as Lehrer writes, it turned B.B.D.O admen into “imagination machines.”  What is unique to brainstorming, and is ostensibly the key to its creative successes is that it is practiced in an environment free from criticism and negative feedback.  Brainstorming is, in essence, the ultimate non-adversarial context where every idea, no matter how asinine, is considered a legitimate candidate for non-judgmental discussion: “Forget quality; aim now to get quantity of answers.  When you’re through, your sheet of paper may be so full of ridiculous nonsense that you’ll be disgusted.  Never mind.  You’re loosening up your unfettered imagination.”  These words, lifted from Osborn’s pages, is the distillation of his theory of optimal creative production.

The practice of brainstorming is certainly prolific.  Indeed, if you’ve never heard of brainstorming, it wouldn’t be a stretch for me to welcome you back from your long sabbatical under that rock.  Despite its vast influence, the efficacy of brainstorming has long been empirically undersupported.  As Lehrer notes, a Yale University study dating back to 1958 shows that brainstorming actually restrains individual creativity.  Subsequent research further supports this conclusion, and it even shows that individuals working in isolation who later pool ideas are more effective than brainstorming groups.  Despite this, however, group thinking is becoming a necessity, as our contemporary problems are so complex that the solitary scientist or thinker is now rendered obsolete, the humanities notwithstanding.  How well would a resurrected Alexander Graham Bell compete with the hoards of Google PhD-toting engineers?  Probably about as well as Myspace competed with Facebook.  Wait, what’s Myspace you ask?  QED.

No, the debate isn’t between the individual thinker toiling in isolation or the group where no idea is too stupid to introduce, but rather between non-judgmental brainstorming or a group dynamic that leverages conflict and debate as a means to produce the best results.  Empirical testing, of course, shows that the latter wins out, by a margin of more than twenty percent.  So, if conflict is actually a boon to creativity, then I think this engenders further curiosities concerning human psychology and the optimal conditions for productivity.

How would the Socratic dialogues read if dialectic was replaced with Osborn’s method?  Well, they probably wouldn’t be read at all.  Explicit criticism of ideas has long been the preferred method in philosophy, especially within the analytic tradition.  Thinking about what we call Hegelian dialectic (which was, incidentally, never formulated by Hegel himself), we can see that coupling a thesis with its negation, or antithesis, is resolved by the synthesis of the two, and this reconciliation is intended to produce a higher level of understanding.  Why shouldn’t we jettison the tradition of brainstorming for a group dynamic that fosters and encourages explicit conflict, especially if this conflict produces better results?  Moreover, what these findings prompt is the question of explicitly non-adversarial institutions.  Would certain practices that are currently conceived as such be made better or more effective through their re-structuring into explicitly adversarial or conflict-welcoming institutions?  If there is something essential to our human psychology such that we thrive on conflict, shouldn’t we incorporate this feature rather than try to suppress it?

What is that old saying?  “Judge not lest ye be judged.”  To that I might say, “judge me, since I play to win.”

Bubbling up in the Ethics-for-Adversaries lab…

In this blog we have spent a lot of our time with case studies drawn from the “Big 4” large-scale deliberately adversarial institutions: markets, electoral politics, sports, and the justice system. But some of the most illuminating analyses are sparked by adversarial activities in other realms, or in peculiar corners of the Big 4.

Based on an initial brainstorming session with this year’s team of bloggers, here are a few of the realms of structured competition you can expect to see future posts on:

  • University Student Politics (ought we to expect an emphasis on certain unwritten democratic norms that have fallen by the wayside in big-money national politics?)
  • Debate Club (how is it like a sport? what is its function? is this a better way to develop public-speaking and logic/rhetorical skills than other pedagogical or social means? what formal and informal rules and norms surround the competitions?)
  • Academic Philosophy (similarly, what can we learn by contrasting student and professional academic philosophy communities that place greater or lesser emphasis on aggressive argumentation?)
  • Job Hiring for Non-Adversarial Institutions (there are formal and informal competitions going on all the time in even the most non-adversarial institutions. E.g., competitions for student placement or job hiring. How do otherwise non-adversarial institutions best handle and constrain these competitive moments?)
  • Ballet-Company Politics (one such non-adversarial institution — after all, its purpose is to put on a show that is evaluated on its own terms by aesthetic criteria — is the ballet company. And yet at all levels, we are told that the competition between dancers, and their parents, is like a blood sport.)
  • Animal Mate-Selection (what can we learn from the mostly genetically-encoded norms that govern mate-selection in different parts of the animal kingdom? Robert Frank has recently written that  Darwin, not Adam Smith, is really the father of modern thinking about market economics. So what can we learn from Darwin about the social benefits of a well-designed adversarial practice?)
  • International Relations, Diplomacy, Espionage, and War.  (At the limit: surely one of the oldest, and most ritualized, deliberately and inherently adversarial practices.)
  • Scientific Research (a cooperative community in a common search for the Truth, or red in tooth and claw? What kinds of tactics and strategies are justifiable in the competition for grants, patents, and publications?)

Expect this list to grow over the coming weeks. If you have suggestions for other  adversarial realms we should be working on, please let us know in the comments section, below.

Race-to-the-bottom watch: The sensational path to the gutter

In today’s 24-hour coverage by cable and internet news media, keeping abreast with current events has become more convenient than ever, but has the increased quantity of news come at the expense of quality?

The ubiquitous nature of news as a product of technological innovation has created a fierce competition among media outlets. Cable news networks such as FoxNews, CNN, and MSNBC compete daily to increase their market share of a limited number of viewers. In this market of perfect or almost perfect substitutes, the logical option to beating your competitors would be to try as much as possible to differentiate your product from the rest of the field, and this is exactly what cable news networks engage in.

A favorite strategy of networks in distinguishing their products is to rely on the over-the-top personalities of their journalists. As a consequence, we have seen a gradual shift of importance away from the news and towards the newscaster, as the voices of Glenn Beck, Bill O’Reilly, Mike Huckabee, Rachel Maddow, Keith Olbermann, Lou Dobbs, and many others work to define a particular station’s unique image. The assumption underlying this trend is that news on its own is not enough to attract viewers; therefore, networks compensate for the dull news with flamboyant hosts (and extreme guests) who do extended opinion shows on the events of the day.

The conundrum is that as one network becomes more entertaining, the others have to scramble to catch up if they want to avoid being left in the dust.  So far, the three major networks have all done their share to stay competitive, but what has been left in the dust is the news they were originally intended to report.

A recent study done by the WorldPublicOpinion.org found that, while there is a significant number of misinformed viewers of all cable news outlets, FoxNews viewers are the most likely to be misinformed about objective facts in current affairs. This may come as no surprise however, as the industry incentives to sensationalize have, for example, frequently led FoxNews’ primetime pundit Glenn Beck to turn world news into entertaining puppet shows for his audiences to enjoy. And puppet shows are not even the end of the story. Some viewers have even turned exclusively to Comedy Central’s Colbert Report or The Daily Show for their portion of the day’s news.

For cable news, the race to entertain viewers has led to a race to the bottom in factual reporting. In order for a network to be competitive, it has to have its own brand of radical anchors that cater to a specific and ever-more partisan audience. The result has been the creation of a perpetually polarized atmosphere and an uneducated viewership. Only time will tell if the demand for entertainment news programs will continue or if viewers will become disillusioned and seek alternative or additional sources for news, hundreds of which are already available online.

The Primaries: what doesn’t kill them makes them stronger?

That special time of the election cycle is approaching us—the primaries. A time when members from the same party begin a four to six month cycle of in-fighting that makes even the nastiest of family arguments look like a walk in the park. I have always found the American Presidential Primary system to be fascinating because of the quick shift that the Democratic and Republican (and…Tea??) Parties must undergo between competition and unification. They compete heavily and often ruthlessly for the nomination amongst their own party, but then everyone in the party is expected to turn around after the convention and promote a unified stance behind whoever the nominee may be.

Essentially, what we see in American politics is that our entire political system was established to be a very deliberately adversarial institution. Americans believe that a one-party system, without debate and negotiation, can lead to corruption, or—our Founding Fathers’ biggest fear—a non-representative monarchy. But, within this system we have developed political parties, which are not deliberately adversarial institutions. Yet, every four years the parties break their norm of cooperation and, essentially, become adversarial institutions in order to attempt to elect the candidate who will win the White House.

This seems pretty unusual, right? Well, I would argue that this is actually a commonplace practice amongst many institutions that are not necessarily adversarial in and of themselves, but must compete in a larger adversarial context. Law firms are perhaps the greatest example. The American legal system is very adversarial, but law firms themselves are supposed to be cooperative bodies that are working towards the same goal. However, in order to motivate employees and attempt to rise to the top of their field, law firms often create inter-office competitions that pit employees against one another.

After: It's a different story after the primary, when party unity trumps all.

 

The American Presidential election system is often criticized, and as we begin yet another election cycle the pundits and criticism will rise anew, but maybe we should all think more about why it is designed this way and how effective competition can be first.

Race-to-the-Bottom Watch: Fishing for Trouble

What’s the most deadly occupation in America? According to the U.S. Bureau of Labor Statistics, it’s fishing. Commercial fishing, to be precise. Why is fishing so dangerous? Fisherman can be trapped in a perfect storm of collective-action problems and, well, actual storms.

The harsh competition in this already dangerous industry is leading workers to labor in ever-worse sea conditions in order for businesses to stay afloat (so to speak). The best fishing grounds are often found in the most treacherous seas, and the clock ticks down quickly in some fisheries (say, the crab fishery off the coast of Alaska) where the seasons last only a few weeks. When one vessel decides to go out in stormy weather in order to get a competitive edge, crews of other vessels are faced with the dilemma of either falling behind the competition or following suit in braving the potentially life-threatening conditions.

This dilemma is only exacerbated by the depleted state of many of the world’s most important fisheries.  In an effort to stem the “tragedy of the commons” of overfishing, authorities have commonly resorted to setting an overall limit of fish that can be caught in a given fishery for a given season.  The approach of giving an aggregated limit breeds intense competition because each fish caught by one fisherman entails one fewer available to all the others.  This creates what has become known as a “race to fish” wherein fishermen are willing to do almost anything in order to nab a greater share of the overall quota before it runs out, including foregoing safety precautions.

So this race to fish is really a race to the bottom. One crew deciding to risk the elements in order to gain a competitive advantage starts the race. But once the other vessels join the competition by going out in perilous weather conditions, the competitive edge that motivated the first mover vanishes, while the risk of death for all of the fishers increases.  Thus, in the race to fish we can see how individuals attempting to act in their own interest, while responding to the actions of others attempting to do the same, can all end up worse off.

Is there any way out of this race to the bottom? Some authorities have replaced the overall quota with individual allocations to prevent such fierce competition.  Critics protest, however, that this solution does not live up to the free-market principles of American capitalism.  However, it is evident that the case of a totally free market for fishing (in which fishers and their customers do not pay the cost of replenishing the fish stock) is likely to lead to overfishing and ultimately the end of any kind of market for fishing. What if the rights of individual allocations were auctioned off in advance?