This essay was selected among the Top 100 international contributions from the Leaders of Tomorrow (LoT) through the Global Essay Competition (GEC) on the theme “Trust Matters” at the 50th St Gallen Symposium 2021 conducted virtually from the University of St Gallen, Switzerland on 5-7 May.

reciprocalaltruism

Introduction

“I’m not upset that you lied to me, I’m upset that from now on I can’t believe you.”

– Friedrich Nietzsche

An ordinary person’s definition of trust is likely to lack a single consensus. A concept deeply entrenched in personal choice, cultures, and moral compass becomes even more complicated when extrapolated to a greater scale in organizations, corporations, or governments. To enable an objective and practical mechanism that reinforces trust is a tough ask.

While social scientists, theorists, and psychologists have considered trust as a dispositional variable often linked with human vulnerability, intrinsic expectations of promises being kept, and an inherent faith in humanity, in this essay I have taken a game theorist’s and a behavioural economist’s approach to trust building from an economic and business perspective, where trust as a behaviour evolves in humans. I have initially contextualised the topic by attempting to define trust (or the lack of it), then discussed how a lack of trust is not exactly unexpected in the 21st century, introduced the concept of reciprocal altruism and the strategies inherent in human behaviour, created a mechanism for quantifying a business and social value of trust, and finally suggested a means of utilizing behavioural theory to push the society towards a robust position of trust.

Shifting away from trust

A lack of trust essentially stems from a divergence of motivations. It is easy to repose faith and belief in an individual or an organization when one is convinced of an alignment of purpose or intention in the other with oneself. While kinship and prior association are often synonymous with existing trust, from a broader viewpoint trust is essentially a situational phenomenon – a function of the roles every individual is playing under given conditions. Let us look at two well-observed scenarios where a lack of trust is ubiquitous.

On a larger scale, it is worthwhile to look at erosion of trust in governments and political institutions. Democratic governance functions assuming that the people and governments elected by the polity will work towards the goal of improving the lives of the people who elected them – a purpose which is in alignment to the personal ambitions of the citizens. But empirical evidence has shown otherwise. The world’s oldest democracy, the United States, has seen less than 30% of its population trusting the government since 2007. In Australia, the shift is more intimidating; not just on elected governments, but mistrust in them has led to more than half the electoral population losing faith in the democratic system itself as one which can preserve their priorities. This comes from the growing belief that politicians in power have sufficient motivation to pursue a set of ambitions unaligned to those of the people who elected them. As a result, governance institutions can end up with a set of self-serving individuals at the helm who are capable of gaming the electoral system, resulting in a vicious cycle of erosion of public trust.

Let us now move from a vast institutional scale to a more limited organizational scale. In companies and businesses which employ a decent number of people under them, individuals from completely different backgrounds are grouped together into teams. Lack of trust within a team can spell disaster for the organization’s goal, and therefore the incentive structures and organizational design are created to ensure a common and non-conflicting goal for all members of the team such that mistrust on intentions can be avoided. When this fails, mistrust breeds and employees work not towards the organization’s progress but for personal gains.

To cut a long story short, alignment of motive gives birth to trust. Unfortunately, society does not provide such utopian luxuries, and it is therefore the need of the 21st century to figure out a mechanism which builds trust between individuals, corporations, and nations, even while their fundamental motivations, and often their raison d’etre, are anything but aligned.

Anticipating conflict

Situations of trust involving cooperation and conflict between players have been recognized in theory since Albert Tucker’s seminal paper in 1951 on what is globally known as the Prisoner’s Dilemma. Apart from providing concrete theoretical evidence on why mistrust and lack of cooperation is likely to exist between self-serving players, the construct also treated an abstract and psychological concept like trust and belief in terms of quantitative measurements or “payoffs”. To a non-game theorist, the results of the game can be surprising. In a pure prisoner’s dilemma game, both players display lack of trust in the other and settle for a resultant payoff which is strictly lesser than what both might have gained, had they cooperated. Due to mistrust in the other’s action, both players settle with a “Nash equilibrium” payoff, which is less than the pareto optimality. In effect, the lack of trust has a clear, succinct, and measurable impact upon both players. The history of political governments and business corporations in fact have thrown up multiple instances which have been reduced (and to some extent simplified) to a prisoner’s dilemma game. We look at a business example first.

Should a soft drinks company charge a higher margin on their product, trusting the competitor to do the same, so that both end up earning similar higher profits? Or do they mistrust the competitor fearing that they will defect by reducing their margin in a bid to capture greater market share (which eventually balances out the smaller margin)? Political adversaries are not alien to such situations as well. Should a leading political party maintain the stable status quo regarding rising national debt, assuming that the political rivals would align themselves to the policy? Or would the government adopt drastic measures risking widespread economic instability and disruption, under the fear that the primary political opposition might otherwise look to reap political dividends through public appeasement? Based on Tucker’s theory, mistrust would prevail and both players would always come to a non-optimal solution at the cost of public services and security. An immediate personal gain at the cost of the other overshadows the larger benefit which mutual trust would have generated.

Experiments with altruism

“Experience without theory is blind, but theory without experience is mere intellectual play”, said the German philosopher Immanuel Kant, and the theory behind prisoner’s dilemma proved to be no exception to this premise. In spite of a clear mathematical indication towards the non-cooperative and mistrusting Nash equilibrium to be taking precedence over all other behaviours, experimentalists have had different results to show. Everyday actions and behaviours in all scales and dimensions around us are replete with instances of human consideration, fairness, and altruistic behaviour in general, all of which contribute towards the notion that trust beyond personal benefit does indeed exist. It is important to define altruistic tendencies here. In this context, it refers to facilitating or actively contributing to the benefit of another unrelated and independent individual, but at a direct and finite cost of some direct personal detriment. There have been volumes of experimental and theoretical research conducted on whether a game theorist’s conjecture holds true in society. As a result, the theory around the prisoner’s dilemma has been further developed that accounts for behavioural and evolutionary phenomena influencing cooperation and trust building in cases of conflicting motivations.

The splendour of empirical and evidence-based research comes to the fore when we deal with topics such as these at an intersection of sociology, economics, and anthropology. R.L. Trivers, a biologist by profession, in his seminal work on “Reciprocal Altruism” in 1971, introduced to the academic world how altruistic behaviour can be triggered in humans leading to a departure from selfish non-cooperative tendencies. What was initially shown as a behaviour persistent among animal species such as cleaner fish off Australian coasts and nesting birds off seashores was soon extrapolated and verified among different species and sub-species, humans included. Altruistic behaviour and its dependence upon reciprocity was observed in humans and human constructs – and this therefore highlights its relevance in this essay as a means of “building trust”. I would first elaborate upon a static model of how altruistic tendencies are inherent in humans in a way similar to personality traits embedded in our genetic material. Next, I would extrapolate on how “repeated interactions”, which can be linked to social and professional lives of humans and groups, influence the evolution of these tendencies and traits over time, in a fashion very similar to how natural selection drives species towards an evolutionary genetic stable state. The forms the basis of the hypothesis that by incentivizing altruistic behaviour, human and institutional actions can be organically directed towards one where altruism is reciprocal, and trust is consistent.

Fair and unfair

Not everyone is a game theorist. Apart from the obvious motivation of personal payoff, we are internally governed by a host of other guiding factors. One such principle is the preference for fairness – a disposition towards equitable outcomes within the society. So profound can be our disinclination towards unfair allocation of spoils that a perfectly rational individual might be quite ready to give up some of his or her own payoff if that can prevent another person accumulating a high payoff which is not equitable or “fair”. While a preference for fairness can manifest itself in two ways – obstructing someone’s unfair advantage or alleviating someone’s unfair disadvantage – it is observed that the negative motivation drawn from the former is usually a stronger driver than the positive motivation drawn from the latter. Complex psychological behaviours such as the green beard effect may also influence one’s actions and trustworthiness. As described in Richard Dawkins’ “The Selfish Gene” where a species of birds depend on others to preen a part of their bodies, some birds can be inherently trusting to begin with, while others are blatant seekers of unfair advantage. Inequality aversion exists among everyone in different proportions, and along with social traits like gratitude, honesty, guilt, etc, it all builds to create a disposition, almost akin to a genetic wiring, of an individual’s ability to trust. To summarise, not everyone is a cynic all the time.

If the payoffs are small and their impact upon an individual is limited, chances of displaying altruistic tendencies are possibly higher. But when we consider businesses, corporations, and governments, are the traits like friendship and morality strong enough compasses to keep them on the tracks of trustworthy behaviour? It seems unlikely, simply because we are dealing with far greater stakes. Affective decision making (ADM) comes to the fore, and the objective rational cognitive process supersedes the subjective emotional. And therefore, the need to objectively model altruism and trust.

Reciprocity through evolution

Precisely like genetic traits, a disposition to trust is not a static feature. Just as species evolved to select and display the most effective attributes fit for survival, the repetition of human and organizational interactions plays a critical role in enabling a characteristic to change. Over “generations”, which in this case refers to repeated contact, a reciprocity can be developed between players which throws up an optimum strategy diametrically opposite to what Tucker’s model had predicted. This in turn brings us to the fundamental hypothesis of this essay – objective trust can be built by creating the correct environment conducive for altruistic behaviour.

At first glance, it still is counter intuitive. Altruistic behaviour very clearly comes at an immediate cost to the self. But the essence of the model lies in the fact that “trust” here does not focus upon incrementing one’s own share as compared to one’s competitor, but towards increasing the size of the total pie. It is also the reason why it is important to recognize the business impact of the lack of trust and not simply treat it as an emotional abstract. By measuring the economic value of trust, which translates to a fixed share from a sum total which is greater than before, a concrete framework for building and ensuring sustainable trust can be created.

Conclusion

“The best way to find out if you can trust somebody is to trust them.”

– Ernest Hemingway

The concept of reciprocity in altruistic behaviour over continuing interactions can play a crucial role in building society-wide trust – something which needs to be leveraged upon. Human interactions requiring trust are never one-off or isolated events. In the animal kingdom, a “tit-for-tat” strategy has shown great rewards in terms of building trust between and within species. With repeated contact, it becomes apparent that reposing trust, while counter intuitive, is actually enabling greater benefit for all. To refer to Hemingway, I shall continue reposing trust in you, as long as you continue to keep it.

Photo Credits: @frametheway

References:

Dawkins, R. (2014). The selfish gene. In Essays and Reviews: 1959-2002. doi:10.2307/3317264
Gwebu, K. K. L., Wang, J., & Troutt, M. D. M. M. D. (2007). A conceptual framework for understanding trust building and maintenance in virtual organizations. JITTA : Journal of Information Technology Theory and Application.
Osborne, M. J. (2002). Nash Equilibrium: Theory. An Introduction to Game Theory.
Trivers, R. (2006). Reciprocal altruism: 30 years later. In Cooperation in Primates and Humans: Mechanisms and Evolution. doi:10.1007/3-540-28277-7_4
Trivers, R. L. (1971). The Evolution of Reciprocal Altruism. The Quarterly Review of Biology. doi:10.1086/406755
Tucker, A. W. (1983). The Mathematics of Tucker: A Sampler. The Two-Year College Mathematics Journal. doi:10.2307/3027092