Small-game fallacies

Most studies in experimental economics suffer from small-game/large-game effects. Unless these experiments are very securely anonymized, in a way the players actually trust, and in a way the players have learned to adapt to, overriding their moral instincts — an extremely rare circumstance, despite many efforts to achieve this — large-game effects quickly creep in, rendering the results often very misleading, sometimes practically the opposite of the actual behavior of people in analogous real-life situations. A common example: it may be narrowly rational and in accord with theory to “cheat”, “betray”, or otherwise play a narrowly selfish game, but if the players may be interacting with each other after the experimenters’ game is over, the perceived or actual reputational effects in the larger “games of life”, ongoing between the players in subsequent weeks or years, may easily exceed the meager rewards doled out by the experimenters to act selfishly in the small game. Even if the players can somehow be convinced that they will remain complete strangers to each other indefinitely into the future, our moral instincts generally evolved to play larger “games of life”, not one-off games, nor anonymous games, nor games with pseudonyms of strictly limited duration, with the result that behaving according to theory must be learned: our default behavior is very different. (This explains, why, for example, economics students typically play in a more narrowly self-interested way, i.e. more according to the simple theories of economics, than other kinds of students).

Small-game/large-game effects are not limited to reputational incentives to play nicer: moral instincts and motivations learned in larger games also include tribal unity against perceived opponents, revenge, implied or actual threats of future coercion, and other effects causing much behavior to be worse than selfish, and these too can spill over between the larger and smaller games (when, for example, teams from rival schools or nations are pitted against each other in economic experiments). Moral instincts, though quite real, should not be construed as necessarily or even usually being actually morally superior to various kinds of learned morals, whether learned in economics class or in the schools of religion or philosophy.

via Unenumerated: Small-game fallacies.

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