Translator: Ellen Maloney Reviewer: Nam Thai
A guy goes to his mother and he says,
"Mother, after forty years, I've finally decided to get married."
The mother is so happy and says,
"I'd love to meet your future wife, please bring her over for a Friday night dinner."
Guy says, "Great, I'll bring her over."
Then he says, "You know, mother,
in the last three years, I dated three other women.
Why don't I bring all of them for dinner and let's see if you can guess
which is the one I am going to marry?"
(Laughter)
The guy's excited. the mother's excited.
Friday night dinner, he comes home with four women,
and the mother starts interrogating them.
The first, the second, the third, the fourth;
she goes back and forth, back and forth for an hour.
At the end of the hour, she points to one and says,
"This is the one! This is the one you're going to marry!"
The guy is just shocked.
He says, "Mother, how well do you know me? How well do you understand me?
I love all of these women, I admire them, I am friends with all of them,
but this is the one I am going to spend the rest of my life with."
He said, "What gave it away?
What was the skill, the attribute, the characteristic,
that made it so clear to you that this is the one?"
So the mother looks at him and she says, "It's the only one I hate."
(Laughter) (Applause)
I want to talk a bit today about trust,
and the first comment I want to make is for us to think about
how much trust we actually have in society.
We don't pay much attention to it, but trust is incredibly important,
and we actually have a lot of it.
Earlier in the day,
I left my backpack on that chair next to that young lady in the red dress
and I said, "Would you watch my bag?"
How many of you have done this before in an airport?
When you say to somebody, "Watch my bag, I'm going to the bathroom."
What you're really telling them is:
"If you want to steal my backpack at some point, this is the ideal time."
(Laughter)
But of course, the moment we say it, we think that there is some trust.
The truth is, very few backpacks -
we actually checked - get stolen in airports this way.
You know and we don't recognize how much trust we have in society.
I was in South America not too long ago,
I went into a very nice store to buy a pen.
it was a very nice store, they had very nice pens,
I picked the pen I wanted, and the person selling me the pen
gave me a piece of paper and pointed me to another part of the store.
I went to this other part of the store, gave the piece of paper,
they took my money, and they gave me another piece of paper.
I went to a third part of the store
where I exchanged that piece of paper for the pen.
Why do they have three people?
Because the people running that store
don't want anybody to have the pen and the money at the same time,
so they create this tremendous separation,
creating tremendous cost for society, just because there is lack of trust.
So trust is important, things go very badly when we don't have it,
but we don't really appreciate how useful it is.
I want to talk a little bit about how important trust is,
then, how do we build more of it.
So to think about the usefulness of trust,
I want to tell you about a game called "The Public Goods Game."
The game goes as follows:
Let's say you have ten people, and every morning, they get $10.
Every morning they get $10 and they can do one of two things:
They can either keep the money for themselves,
or they can put the money into a central pot.
Now if they put the money into a central pot,
the money multiplies five times,
and is then equally divided by everybody.
So what happens?
Day number one:
Everybody wakes up, they get $10, everybody puts the money in a central pot;
Ten people, $10, $100, the money is multiplied five times;
in the evening, equally divided by everybody,
everybody gets $50.
That's what it feels like to live in a good society.
You're contributing something to the social good,
the social good increases, everybody benefits from this.
Everybody is happy!
But one day, one person decides not to put their money in.
What happens?
Nine people put $10 in: We have $90.
Multiply five times, $450, equally divide by everybody,
everybody gets $45.
But the person that betrayed the trust, the zero person,
also has their $10, so they have $55.
So life goes on in a nice way for a while, everybody contributes $10,
at some point one person betrays the social good.
What do you think happens the next day?
Nobody contributes anything.
You can have two equilibria in this situation;
We can have equilibrium where everybody contributes,
but it's a very fragile equilibrium because the moment one person
defects from the social good, everything collapses,
nobody contributes anything.
And it's non-symmetric because if you have a situation
where nobody contributes anything,
it's not as if one day one person contributes
and quickly everybody starts contributing.
Once you get into this situation where nobody trusts anybody,
life is really bad.
If you think about this, this is a great metaphor for trust.
With a tremendous trust in society, it's a public good.
We all benefit from this.
But as people start betraying the social good,
we all suffer, and we all suffer to a great degree.
So trust is a public good, it's a wonderful public good,
when we all trust each other, we all benefit.
But when people start betraying it,
we all lose.
So now the question is, how do we increase trust?
How do we get people to be more trusting?
One lesson is from a game called "The Prisoners Dilemma" game.
I am sure you've heard about this game.
How does this game work?
So the police caught two people, that's the background story for the game.
The police caught two people,
they don't have enough evidence to imprison either for a long time,
so they try to convince them to betray their friend,
to basically become a state witness.
So what happens?
Each of those prisoners have a choice:
Do I keep my mouth shut or do I rat?
Do I cooperate with my friend, do I trust my friend -
we are assuming right now that cooperation is with your friend not with the police,
we are kind of taking the Mafia perspective to this.
(Laughter)
So, do I cooperate, do I trust my friend and remain silent?
Or do I rat on my friend?
And the structure is the following:
If both people remain silent, the police don't have a lot of evidence,
they each get one year in prison.
This is what you see in the bottom cell.
But imagine that you are the orange person in this graph and you say to yourself,
"If I am silent and my friend is going to be silent,
we each get a year in prison.
But if my friend, the blue person, decides to rat,
we move to the top right corner in which I will get 20 years.
Do I like this world? No.
So because I don't really trust my friend, let me rat on them as well."
And often what you have is that both people rat,
each of them get five years.
But if they could only trust each other, life would be better.
Now this is the basic game.
Now imagine two versions of this game.
In version one, people make a decision,
but the decision is for one game at a time.
I play one game with you then I play another game with somebody else.
There's never building up games, it's one game at a time.
In the second version, we play many games with the same person.
What's the difference?
Here's what happens:
In terms of results when we play with strangers,
most people rat most of the time.
Not ideal but that's what people do.
When we play with the same people over and over and over,
we cooperate much more; we remain silent much more.
But this is not the end of the story.
When you think about how these things progress over time,
there are kind of two periods.
When people know they are going to play with the same person over time,
they start by cooperating much much more.
But as they get towards the end of the period,
they stop cooperating.
You see in the beginning, we have time to build our reputation,
to build our long-term game.
But as we get to the end, it's as if we're playing the one period game.
We actually have these two periods
and the effects is much larger in the beginning
as we build long-term relationships, and as we build reputation.
So we start by cooperating, then sadly as the relationship comes to an end,
we start defecting.
As an analogy for this, you can think about marriage.
You start very happy, you cooperate,
then you say,
"We're going to end this thing," and you start being nasty to each other.
So how can we increase trust?
Two lessons are it's about long-term relationships,
and it's about building reputation.
But there's another interesting element.
There's something called "The Trust Game."
The Trust Game looks like the following:
You get two people, player one and player two.
You take player one and you give them some money, you give them $100.
And you say, "Look player one, you can do one of two things with this money.
You can either keep it and go home, in which case you are $100 richer.
Or, you can send it to player two.
Now if you send it to player two, the money will quadruple.
The $100 will become $400.
But when person two gets it, they have two choices:
they can either take the money and go home,
in which case you, player A, have zero,
or they can send you half of it back, in which case you both have $200.
So think about this.
Imagine you're player one, you're the orange player.
And you ask yourself, "What will the other person do?"
Now if the other person was perfectly rational,
and remember, you don't know each other,
you aren't going to meet them in an alley later and can beat them up or something,
you don't know who they are and you'll never meet them.
If you thought that the second player, the blue player is perfectly rational,
what would you think that they would do?
You would say, "They will not send me the money back.
They will take all the money!"
If you think that the other person will take all the money and go home,
what would you do?
You would not send them the money to start with.
So the rational economic prediction
is people would not be trusting and not reciprocate.
And the game will end.
Well, good news. That's not what happens.
What happens is that we do have a tremendous capacity for trust.
What happens is that people often send the money,
the money quadruples,
and then people send the money back.
That's the good news;
we have this tremendous capacity for trust and reciprocation.
But it's not always the case.
It's not always the case that people send the money.
Another question is how do we get it to be more frequent?
How do we eliminate those few cases where people decide to betray the public good?
And one answer is revenge, punishment.
Here's what happens.
Imagine what happened: You're player one,
you're sending the money to player two,
and player two decided not to send you the money back.
I come to you and I say, "Look player one, I'm really sorry.
Player two decided not to send you the money back.
But I'll tell you what.
It's true, you just lost $100, but if you go into your checking account,
and you write me, Dan, a check,
for every dollar you write to me, I will go, I will hunt person two down,
and I will take two dollars away from them."
Would you spend money to basically get player two to spend more money?
Now right now, you're sitting here, you're not very upset,
you were not really betrayed.
So you say to yourself, "I would never do that,
I would never lose more money to get somebody else to pay for it."
But you're not angry right now.
And when people are betrayed, people feel tremendous anger,
people not only are entertaining the notion of revenge,
but they spend a lot of money on revenge.
Of course, we have lawyers to prove that.
(Laughter)
And not only that, the part of the brain that gets activated
when people plot and execute revenge
is the part of the brain that is connected to pleasure.
You can ask yourself: Why would people feel pleasure when they execute revenge?
Revenge, in fact, is one of the most altruistic things you can do.
Why?
Because if you have somebody
you've never met and you'll never meet again,
and you choose to spend some of your own money to teach them a lesson,
you're actually teaching them something
that hopefully will benefit them and society over the long-term.
(Laughter)
Imagine that you and I lived on an island.
And I had a banana and you were thinking about stealing my banana.
If you thought I was a perfectly rational person,
you would say, "Well, Dan is away, let me steal the banana.
It won't bother him so much, he'll go get a new banana."
But if you thought I was revengeful;
that I will not sleep, and I will not rest,
and I will hunt you down and I will take my banana back
and maybe take your goat or something else,
would you even try that?
No.
So the point is that revenge is not only a tool for anger,
it is a tool to ensure cooperation.
And if you did something to me and I took revenge against you is one thing,
but if everybody was upset with you if you did something to me,
it would mean that revenge as a societal force
is actually very powerful in getting people to behave better.
So what's the lesson from this?
Besides from revenge being altruistic.
Trust is important.
Trust is actually incredibly important.
It used to be that we dealt with people more face-to-face;
we knew where they lived, we knew their parents,
we knew their brothers and sisters.
We had all kinds of guarantees that people would behave better.
As society is moving towards electronic transaction,
dealing with people over great distances,
what cues do we have for trust?
What kind of elements do we have for trust, and how do we increase trust?
It's so important, how do we increase it?
Well, some of the lessons come from thinking about long-term relationships,
thinking about reputation, and thinking about revenge.
Now before you take the revenge thing too seriously
and think about how you're going to plot and execute revenge,
I just want to let you know that sometimes the mere fear of revenge is sufficient;
you don't need the actual revenge.
Thank you very much.
(Applause)