Sunday, February 1, 2009

We are like this only...WHY????


First of all, let me give out a few facts: 26% of Indians are below the poverty line. 39% are illiterate (and that excludes functional illiteracy). 30% of the population are unconnected to the roads. The public infrastructure is Non-existent.
A lot of these numbers can be attributed to Apathy, or, lack of public conscience.

Now the question is, Why is it so? why are we apathetic to most of the happenings around us. A possible explanation has been attempted by John von Neumann, Oskar Morgenstern, John Nash and other stalwarts through Game Theory. This theory has given us numerous solutions to the byzantine problems posed by the human behaviour or Behavioral Economics.

According to behavioral economics, humans are supposed to be rational in decision making with regard to their economic decisions. It assumes that the risk levels remaining the same, people expect higher returns. And returns remaining same, they expect lesser risk. This is called 'rationality' or 'utility maximization'.
For example, suppose a building needs to get funds to maintain its garden and the elevators in top condition so that its real estate value remains high. For that, the inhabitants of the building have to contribute. Now as people are utility maximizers, they will seek to save as much money as possible. Thus, the people on the higher floors will tend not to contribute as they feel that beautifying the garden won't be beneficial for them, as they seldom get to enjoy the garden. Similarly, the people on the ground floors will not contribute towards the elevators as they are not using them. Thus the elevators and the garden remain in poor condition and the estate value of the building deteriorates.

This is the Prisoner's Dilemma (problem in Game theory). This can be used to understand Human rationality, irrationality, egotism, selfishness, antagonism, competition, collaboration, cooperation etc. Quoting the classic example from the Wikipedia to explain this:

Two suspects are arrested by the police. The police have insufficient evidence for a conviction, and, having separated both prisoners, visit each of them to offer the same deal. If one testifies (defects) for the prosecution against the other and the other remains silent, the betrayer goes free and the silent accomplice receives the full 10-year sentence. If both remain silent, both prisoners are sentenced to only six months in jail for a minor charge. If each betrays the other, each receives a five-year sentence. Each prisoner must choose to betray the other or to remain silent. Each one is assured that the other would not know about the betrayal before the end of the investigation. How should the prisoners act?
More explanation can be found here. According to this, people are Supremely Selfish and Coldly Rational. From the above example, we can infer that cooperation will be the best strategy that would yield the best yet safe results, yet people will tend to defect in order to maximize the profit. Citing an example: India exports Red Chilli Powder to UK, and gets paid in return. To continue making modest profits out of the deal, one can send chilli powder as expected. But if one tries to squeeze more out of the deal, one would mix Red Brick Dust to the powder and make higher profits. This is the case of the defection. But this would result in the termination of the deal, thus ending any scope of continuous payment. Thus, being myopic, people will tend to defect. Thus, we would keep our home clean, but throw that dirt on the streets, polluting the country. Thinking that what difference can I alone make. Saying that if all are doing it, how me not doing it make the difference?

Thus we can be termed Privately Smart and Publicly Dumb!

And thus when we see something going wrong around us, we usually keep mum thinking that someone else would do it, how would me making a hue and cry bring about any change?
And when certain Mr. X starts up a fight for people travelling without tickets, we tend to ignore it and carry on with our lives as if it never happened.

We are like this only!
The question is, for how long?

2 comments:

  1. dude remember me!!!!!!!


    wat xactly r u at..............!

    ReplyDelete
  2. yeah rupchi...dude, am at trichy.

    ReplyDelete