The retreat of "scientific selfishness," a literature review

Neoclassical economics was built on the straw-man of "homo economicus," an inherently selfish utility-maximizing actor, and since the mid-1970s, we've been building systems and institutions that take this kind of sociopathic behavior for granted.

But the rise of experimental economics, coupled with increasing dysfunction -- stagnation, market concentration, inequality, political instability -- has put "scientific selfishness" (and the just-so stories that make sociopathy the path to Pareto-optimal outcomes) in retreat, and both the biosciences and the social sciences have been invigorated with new accounts of human behavior.

My favorite book on the subject is Yochai Benkler's The Penguin and the Leviathan: How Cooperation Triumphs over Self-Interest, a voraciously readable and fascinating title from 2011 (you can get a flavor of it from Benkler's outstanding book-talk at Harvard's Berkman Center, above.

But Benkler was way ahead of the curve. Since Penguin and Leviathan, there has been a steady drumbeat of new titles tackling the subject, and Oxford economics prof Paul Collier rounds up a literature review in the current Times Literary Supplement.

As it happened, I rewatched the Benkler talk yesterday and was riveted by one part of it, where he described an econ experiment based on a short (seven-round) Prisoner's Dilemma game, played with both fighter pilots and university students. In one condition, the subjects were told that the name of the game was "The Community Game." In the other, they were told that it was "The Wall Street Game." In the "community" condition, 70% of the players co-operated, all the way to the final round, and every player was better off as a result. Read the rest