Broadband and Me

Trust and the Nash Equilibrium

Brain Waves: Neurotechnology on Corante

Standard economic theory (the “Nash equilibrium”) predicts that rational self-interested people should never trust another person, and if someone trusts you, you should not be trustworthy. Why? The Nash equilibrium says that if you are decision-maker 2, you should prefer more money than less so you should not be trustworthy (that is, return any money to decision-maker 1). Decision-maker 1 should realize this and therefore never send anything to the second person. Yet we see abundant trust in the lab and in daily life.

What the Nash equilibrium ignores is that humans, while certainly self-interested, also are highly social creatures and have brains designed to interpret social signals; in other words, we care what others think about us and our brains motivate us to take others into account. This could be called empathy. There is little evidence that creatures besides humans are empathetic, and indeed humans are empathetic even to strangers. This reveals an important role for the emotions in decision-making. Further, such empathy enables unrelated humans to live together with generally little violence in large cities and makes modern industrial economies possible.

Great piece on trust from Corante. Paul Zak, an assocaite professor of Economics from Claremont University certainly puts me right on Nash Equilibrium. In my defence (and its not much of one really) I would say I was interpreting from the dialogue from the film which seem to imply a different interpretation...

More importantly however is this innate notion of trust amongst Humans. If this is defintely so doesn't it have a huge impact on philosophy?

I'm a bit rusty on this but Hobbes' view of man as being inherently evil and only working together because of inherent self-interest (outlined in Leviathan)falls by the way side. Instead the idea of socialable Humans, who trust one another come to the fore which pushes this towards a view more in keeping with the ideas of Rousseau (my view of this comes from The Social Contract but perhaps other works by himare better).