altruism LO28516

From: Doug Merchant (
Date: 05/16/02

Replying to LO28501 --

As usual, At de Lange's posts over stimulate, I'll try to focus on one

>... I always feel uncomfortable when a person articulates the LO as if it
>is a "self-interest system". The LO is definitely not for me a
>"self-interest system", but rather almost like an "altruistic system". I
>had to add the "almost" because there is something else which I cannot
>put my mental finger on at this moment.

As an example of a commitment problem, imagine "a kidnapper who suddenly
gets cold feet. He wants to set his victim free, but is afraid he will go
to the police. In return for his freedom, the victim gladly promises not
to do so. The problem, however, is that both realize it will no longer be
in the victim's interest to keep this promise once he is free. And so the
kidnapper reluctantly concludes that he must kill him." --- Thomas
Schelling cited by Robert Frank in "Passions Within Reason: The Strategic
Roles of the Emotions".

Robert Frank argues that altruistic behavior and emotions are related to
the involuntary mechanisms that signal trust worthiness and enables the
solution these types of commitment contracting problems.

Two such commitment problems come to mind in organizations, the exchange
of information and the sharing of "half-baked" ideas. Prior to the
information exchange, neither party may know the value of the information.
Once the information is given, the giver may no longer have means to
enforce the contract and the receiver may no longer have the incentive to
value the information in good faith or to honor the contract even if the
value of the information is successfully determined. The more novel the
environment, the less certain, a priori, the value of information
exchanged and the greater the contracting problem.

The sharing of "half-baked" ideas is a specific type of information
exchange with more extreme contracting problems. Not only is the value of
information difficult to determine prior to the exchange, for the provider
of the information, the potential down side of such exchanges can be
great. It is almost a cliché, "Go ahead, tell me what you were thinking.
Come on, you can tell me. ...... Oh my God! How can you be so weird!!!"

Some organizations solve these "contracting problems" by radically
changing the organizational economics for information exchange. Instead
of an exchange economy, their transactions are governed as a "gift
economy". People gain group status by what they give away. Traditional
research institutions have been governed as gift economies, the most
esteemed member is the one who gives the most. Of course, we now see the
tension in the research community when gift economies collide exchange
economies. (These conflicts can also be heard on the electronic forums
when contributors discover their "gifts" have been used commercially by


doug merchant

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