Capitalism and Society Volume 2 Issue 1 2007 Article 2 Freedom versus Control Comment on Behavioral decision research legislation and society Three cases by Max H Bazerman Jonathan Baron University of Pennsylvania Copyright c 2007 The Berkeley Electronic Press All rights reserved Baron Freedom versus Control 1 INTRODUCTION Of course I agree with Prof Bazerman I agree that the field of behavioral decision research is neglected It is my field too and a basic finding of psychology is that people feel that their own ideas are given insufficient attention I also agree with all the findings that are cited and their application to the cases under discussion I could stop here but to make this comment a bit longer I would like to discuss an issue that runs through Bazerman s article In all of the cases he stands on the side of regulation or law and against the side of freedom The term freedom isn t quite what I mean because we are talking about the freedom to kill people with cigarettes or defraud them out of their savings Maybe anarchy would be a better term but the line between anarchy and liberty is not a sharp one and I want to call attention to a real problem I would like to discuss some findings from our field that might weigh in against regulation These include the undermining or crowding out of trustworthiness a kind of isolation that is similar to what Bazerman discusses an isolation that leads to a sort of local repair heuristic that is at this point largely speculative and the danger of imposition of moralistic values 2 UNDERMINING TRUSTWORTHINESS A well known result from social and developmental psychology is represented in the title of a book The hidden costs of reward Lepper and Greene 1978 The basic idea is that human goals are in part constructed We seek what we understand ourselves to be seeking Thus when we are led to believe that we are seeking extrinsic reward or we might add avoiding punishment we lose whatever intrinsic motivation we would otherwise have had In a typical study described by Lepper and Greene some nursery school children were given a chance to play with large felt tipped pens a new and intriguing activity for them Some children were offered an extrinsic reward for drawing with the pens a reward beyond the intrinsic pleasure of drawing with them They were told that by drawing with the markers they would have a chance to win a good player award a fancy paper certificate with a blue ribbon and a gold seal Children in a control condition were not told this All children were given an opportunity to use the markers and each child in the experimental group was given the expected reward Half of the control subjects were given the certificate as well Two weeks later the markers were again made available along with other toys The children in the experimental group who had been told in advance about the reward before the first experience with the markers used the Published by The Berkeley Electronic Press 2007 1 Capitalism and Society Vol 2 2007 Iss 1 Art 2 markers the second time only half as much as the other subjects did Most children enjoy the markers and having played with them once will play with them again Those who were promised a reward however seem to have concluded that they did the original drawing in order to earn the certificate This conclusion weakened their belief that they did the drawing out of intrinsic interest and the motivation personal goal of drawing out of intrinsic interest was thereby reduced This kind of study has been replicated extensively More recently experimental economists have turned their attention to this phenomenon giving it the name of crowding out of intrinsic motivation They have examined punishment as well as reward although the distinction is sometimes difficult to draw In one study of many Schweitzer and Ho 2004 examined trustworthy behavior in a repeated trust game Berg et al 1995 In this game the first player can pass some number of points up to 5 to the second player The points double as they are passed and the second player then decides how many points to return to the first player If the first player passes 5 then the second player is minimally trustworthy if she returns the 5 but better to return some of the profit too A pair of partners played for 15 rounds Monitoring consisted of the first player learning immediately the response of the second player Otherwise the first player did not learn until the end Monitoring occurred on 5 or 10 of the 15 rounds selected at random When second players were monitored they returned more than when they were not monitored However more monitoring results in their returning less on the rounds when they were not monitored This result was great enough so that monitoring on the whole had a negative effect on trustworthy behavior Another relevant study was inspired by its author s visit to a market in Mexico Guerra 2002 The author bargained with a seller of a calculator until the seller was willing to accept half of the stated price The author refused went looking for a still better price failed to find one and returned to the original seller who then refused to sell for anything less than the original stated price The seller clearly wanted to punish the author for being untrusting Guerra set up a laboratory analog of this situation replacing the search for better prices with verification of quality Honest sellers were willing to punish buyers at a potential risk to themselves for not being trusting Osterloh and Frey 2004 review the extensive literature showing similar results The suggest that autonomy and careful selection of those who will be trusted are often better than monitoring and sanctions One might also argue following Bicchieri 2006 that the mechanism describe by Lepper and Ross is not the only one at work here Rules codes and regulations communicate social norms and expectations A rule without teeth or with only weak punishment insufficient to reduce the expected utility of violation below zero can convey a social norm a rule that people are willing to spend http www bepress com cas vol2 iss1 art2 2 Baron Freedom versus Control effort to follow and to enforce so long as they believe that most others around them are likewise willing A social norm is thus a conditional motive highly dependent on beliefs about whether others support it or not Codes of ethics convey social norms A regime of monitoring and strong punishment at least making an attempt to reduce the utility of
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