Guest Post: How can small groups put a stop to bad behaviour? Make it a race for second place

Yves here. I’ve been looking for simple, practical ideas on what can be done to stem what seems to be a hopeless slide downward in our standards of conduct. I’d be interested to get reader reactions, particularly if any of you were in organizations that had sanctions that were implemented along these lines.

By James Andreoni, Professor of Economics, University of California, San Diego and Laura Katherine Gee, graduate student in Economics, University of California San Diego. Cross posted from VoxEU

How should a small organisation – a firm, a university, a sports team – encourage good behaviour? While punishment can often make things worse, this column proposes and tests a method the authors call the “hired gun”. By punishing only the worst offender, everyone is given an incentive to be the second-worst offender. If everyone follows that strategy, good behaviour soon follows.

We all know of professors who like teaching but prefer to do research. How does our department make sure we put the right effort into our classes? Our neighbours want us to be clean, even when we might want to tidy our yards later. How can neighbours enforce civility while remaining civil? These situations represent a classic problem in social science. When people face choices that benefit themselves at a cost to others, how do we structure incentives so people do the right thing?

Some have suggested that monitoring by peers can be enough (Ostrom et. al. 1992, Fehr and Gachter 2000). In particular, individuals can punish each other – the good teachers can snub the bad teachers, the clean tenants can scold the messy tenants. And if that doesn’t work, they can resort to other forms of vigilantism.

Economists have examined punishment by peers in laboratory studies by allowing punishment between group members. Peer punishment has been shown to increase good behaviour, but often makes the group as a whole worse off. Vigilante justice is just too costly – people punish too much. When these studies add realism by allowing people to punish repeatedly (Nikiforakis 2008), the result is revenge, feuds, and often devolution of the social order. Punishment by peers only makes things worse.

Hired guns from the Wild West

How often do we see vigilante justice used to enforce good behaviour by others? Instead small groups seem to appoint or hire someone with “authority” to enforce the social order. Just as in the Wild West when vigilantes were replaced with hired guns, schools have department heads who review teaching evaluations, and apartment buildings have superintendents to track complaints. These delegated authorities have the responsibility to discipline those who fall short of good behaviour. But this leaves unanswered a critical question. If we delegate authority to a hired gun, how should they govern? Monitoring everyone and punishing all cheaters is difficult and costly. We need and enforcement method a simple, low cost, has small penalties, and works.

How? Imagine a 1 minute race, where the person who runs the second farthest gets $100. How would this race end? Poetically, it ends at the beginning. Everyone will be standing with toes on starting line, but nobody will cross. Why? Crossing the line starts you in first place, and no one will ever want to pass you.

More realistically, think of driving on the highway. You want to go fast but avoid a ticket. If there is at least one car going faster than you, the highway patrol will ticket the faster car. You’re safe if you are the second fastest car. If no one wants to get a speeding ticket, then everyone will try to be the second biggest speeder. Everyone drops back, leapfrogging each other until they’re all behind the line, that is, they’re all going the speed limit. And, in real life, when a police car is on the road typically everyone swarms behind it. To enforce the speed limit, the officer need only fine the first driver who passes the police car.

We use this intuition to design our enforcement device.

The hired gun versus peer punishment

In recent research (Andreoni Gee 2011a, 2011b) we investigate whether a delegated authority – the hired gun – that punishes only the largest deviators can effectively enforce socially desirable outcomes. We also compare the effectiveness of this hired gun to vigilante or peer punishment. Can a delegated authority replace costly and inefficient peer punishment and get superior social outcomes?

We represent the social dilemma by the public goods game. Each person is assigned to a group of 4 people and given 5 tokens to divide between a socially beneficial public good (like teaching well, or being a good neighbour) and a private good benefiting only themselves (like being a lazy teacher or messy tenant). Each token spent on the public good pays a return of $2 to all group members. This means the group as a whole earns $8 (4 people times $2 each). Each token spent in the private good, by contrast, pays a return of $3 to only the individual who made the choice.

No other group member benefits. A purely selfish person will choose to spend all 5 of their tokens on the private good, making $3 on each, and none in the public good. If all the group members do that, then they will each earn $15 (5 tokens at $3 each). However, a group taking the socially optimal action would instead spend nothing in the private good, and each spend all 5 tokens in the public good for a payoff of $40 per group member (5 tokens from each of 4 group members for a total of 20 tokens in the public good each worth $2).

We add the ability to delegate punishing authority using the hired gun. The hired gun identifies the group member who gave the lowest number of tokens to the public good (like the fastest car on the highway). The hired gun fines this player just enough so that they would rather have been the second largest deviator. In our experiment, this means we punish the biggest cheater so they earn what the second biggest cheater earns, then take one more token away. Now they would have preferred to have been the second biggest cheater.

In our first study people repeated the public goods game 10 times, and then repeated it 10 more times with a hired gun. To prevent reputations, choices were made on a computer in anonymous, random groups that changed each time. As shown in Figure 1, players spend an average of only 1.3 tokens on the public good when there is no hired gun, but they raised their contributions to 4.5 tokens when there is a Hired gun. This is a 68% increase in average earnings, as shown in Figure 2.

Figure 1. Average tokens contributed to the public good out of a possible 5 tokens

Figure 2. Average earnings per person per period

Clearly the hired gun mechanism had the desired effect of starting a race for second place. To understand if this was a superior mechanism to peer punishment we ran a second study. Here we allowed players to pay a price to fine one another after they played the public goods game. This type of vigilante justice is akin to a tenant in the apartment complex penalising their messy neighbour by, for instance, complaining to them in person.

In this second study subjects played a public goods game with the ability to punish their peers. After 10 periods of only peer punishment, some groups were given the chance to pay a fee to get a hired gun. The players paid for the hired gun over 70% of the time, and as can be seen in Figures 3 and 4 it was well worth the cost.

Figure 3. Average tokens contributed to the public good out of a possible 5 tokens

Figure 4. Average earnings per person out of a possible $41

It is clear from Figure 3 that the option to have a hired gun causes people to give more to the public good. In turn Figure 4 illustrates the huge increase in money earned.

When the hired gun option is available, people stop using peer punishment. Just as someone won’t complain personally to messy neighbours, but instead directs complaints to the superintendent, when hired guns are available people stop using vigilantism to enforce good behaviour.

The main message of our research is that when things aren’t working, people are clever enough to invent methods, like a hired gun, to help them achieve better outcomes.

Direct punishment by peers is one option, but it only makes things worse. Instead, we show that delegating punishment that creates a “race for second place” is far more effective and, moreover, pushes out vigilantism.

So, let the races begin!

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  1. Maju

    The whole approach is fundamentally wrong, IMO. You need rewards rather than punishment: the best teachers get to do more research. Pupils vote in secret ballot (for example, this already exists in some public education systems – though it does not seem to serve any clear purpose).

    Of course you may need punishment to curtail the most extreme anti-social behaviors but what really promotes constructive social behavior is that people find rewards on doing it: greater appreciation from others and all that comes with it.

    1. Ricky

      We’re really discussing legal compliance here. Would you reward thiefs who steal less? Positive reinforcement has its place but don’t confuse his thought exercise of being a good citizen with big banks stealing grandma’s pension.

      Yves put this forward as applied to regulatory capture. I think it makes a good deal of sense. In fact every one who’s followed the fastest car so they don’t get a ticket would understand.

      The challenge here is finding someone to be the hired gun who will not get chummy with the robber barons. I think we have a better chance to apply the same principles to politicians though. If either party knew they would get no votes for say 5 or more years I think that would be a constructive way to limit malfeasance and break the hold of the two party system. Getting a majority of people to subscribe to that wouldn’t be easy, but voter diligence and education is the only way out of the messes we are in.

      1. Maju

        Are we. I honestly got stuck with the first example of the duality reluctant teacher / eager researcher of university professors. Where’s the mention of banks? Because I’m always thinking of people and not of organizations.

        Banks are not people and that is part of the problem: corporate irresponsibility. Make bankers lose their home if their business goes bad and they will be more careful but as long as they can limit their loses, they will do stupid things (gamble).

  2. candy

    They didn’t run an exercise where the players get to pay the hired gun some tokens to look the other way.

    1. craazyman

      really. all the psychopaths would go into the hired gun business. wouldn’t be long before bullets were flying in all directions. ecce homo sed Fred.

    2. Dave of Maryland

      Bribery is in fact the fatal flaw.

      So what, in fact, does the no. 1 drug dealer in town do in order to remain the no. 1 drug dealer?

      He bribes enough cops that the good ones (who won’t take bribes) leave him alone.

      He doesn’t have to bribe all the cops. Just enough so that busting him would get him in hot water with the cop’s other cops.

      What we have is a problem of competing cliques inside the same organization. In this case, the clique of cops who are on the take, vs: the “virtuous” cops who are not.

      This is essentially the whistleblower problem.

      That’s the problem to solve. It’s essentially the problem of government as a whole. Of all the various solutions, the king/monarch/dictator for life was the best overall. Some were good, some were bad, most were mediocre, but all of them had quirks that could be learned & eventually catered to.

      So far as that goes, coronating the guy, telling him he will rule for life, telling him his son will rule after him, removes his biggest fear – that of being overthrown – and lets him relax. Spend time with girls, or maybe even do nice things instead of bad ones.

      And, truth to tell, I don’t want to have to figure out my own government. Vote for this or that. It’s above my pay grade, as our host says, and detracts me from getting on with my own business.

      1. Dave of Maryland

        PS: Speeding on the highways is a poor analogy.

        After years of wondering why I wasn’t getting tickets going 80+ mph, I did some thinking.

        Cops weren’t enforcing 65, nor were they giving a “reasonable” tolerance of 70, since lots of guys went faster.

        Lots of guys went faster than 75, but still no ticket.

        From 65 to 75 & still no tickets, the cops clearly had some other idea in mind. But what?

        Suppose, I said to myself, they were enforcing some arbitrary limit. Like, I dunno, 90 or so.

        That would explain why I’ve blown past cops going 83, including once on a completely deserted stretch of I95 in SC, and not been stopped.

        So far as what I myself have seen, cops in CA, AZ, NM, KS, MO, IA, IL, IN, PA, WV, MD, NJ, VA, NC, SC, GA, FL and probably CO are enforcing a limit of at least 85 (probably 90) on the interstates.

        Cops in Ohio enforce 80. I got stopped once while passing through. You are warned.

        This may explain why Montana is eager to cut the crap & simply make 80 official.

        Your experience may be different, and your gas mileage will vary.

        All of you in red cars are warned that red is about the only color you can make out at half a mile. It’s not enough to spot a blip on a radar gun. You have to identify the car itself. Me, I drive dark blue.

        1. Externality

          Many rural areas stopped aggressively enforcing speed limit on the interstate highways after Congress imposed a national speed limit of 55 mph in 1973.

          In order to reduce fuel consumption following American intervention in the 1973 Arab-Israeli war, and subsequent Arab oil embargo against the US, Congress enacted a national speed limit of 55 mph and required states to do the same or lose federal highway funding. Lawmakers in densely populated coastal cities were unable to understand the vast, empty spaces between rural cities and the travel times involved.

          In response to widespread derision, violations, and state and local non-enforcement, the Congress weakened the national speed limit law in 1987 and 1988, and repealed it entirely in 1995. By the time it was repealed, the popular slogan “55 and die” typified the fact that actually driving 55 mph on the Interstate made one the (physically endangered) exception, not the rule.

          The cultural legacy of this was that rural states stopped enforcing speed limits for their own sake and average Americans stopped following them in rural areas. The police in these areas still pull people over for clearly excessive speeding, driving too fast for conditions (e.g., 65 in a snow storm), speeding while fitting a drug courier profile, etc. The lesson is that allowing a distant elite to pass unpopular, poorly enforced laws undermines both respect for the law and effective law enforcement.

          1. Externality

            Should be:

            Many rural areas stopped aggressively enforcing the speed limit on interstate highways after Congress imposed a national speed limit of 55 mph in 1973.

        2. Bob

          Driving a red BMW, I’ve had several occasions for roadside chats with the police in PA. They consistently tell me the same thing: if posted limit is 65, you can go 80; if posted is 55, you can go 65; if posted is under 55 you are still generally OK if you “stay with 10”, but at 25 and below you better just suck it up and drive the posted limit, because the speed is set that low for a reason (like a nearby school).

  3. Immanuel Kant

    Now there’s an interesting idea. Advancing morality by promoting moral relativism. Not sure Kant would have agreed with you, though no doubt JP Morgan would (even if Goldman Sachs didn’t).

  4. derek

    I like the principle, but it needs work.

    1) As the commenter above says, how do you avoid regulatory capture of the hired gun by the worst offender?

    2) Is the penalty always enforced, and is everyone a rational actor? In my experience on highways, there’s a chance you can gamble and get away with being the worst speeder, a gamble one feckless irrational person can be relied on to take. Then the rational rest of us speed a little, safe in the knowledge we’re not the worst speeder.

    3) How do you know who the worst offender is? Is there a good accurate league table? If so, how do you know the table is not suborned (see (1) above) or even just inaccurate for some other reason? If you don’t know who the worst offender is, you have to punish a bunch of merely bad offenders, which is more effort for a small organization with limited resources, and dilutes the effort.

    If the table is bad enough, nobody can trust anybody. For a real world example, see the ratings agencies and their role in the global financial crisis.

    1. Moopheus

      Yes, the highway example shows the limits of the idea. It’s true: when I’m on the highway, I’ll try not to be the guy who attracts the cops’ attention. But I’m still speeding. And there’s still plenty of drivers going faster. The presence of cops and the real possibility of tickets does act as a restraint, but the restraint is limited because there are only so many cops. (On the other hand, when people _see_ the cop at the side of the road, they slow down, then speed up again when he’s gone.) So people are willing to take a certain amount of risk because of that.

      1. kjmclark

        That’s where the apocryphal story of the California Highway Patrol comes in. The story goes that in California, if they get a bunch of people speeding as a group, they’ll use a few officers and pull over the whole group. I have no idea if they ever really did that, but I know the occasional time I’m driving in CA, I tend to slow down more than in Michigan. Of course, in Michigan the story is that no one gets pulled over for going less than 10mph over the speed limit.

    2. KnotRP

      Our founders set up equally powerful competing institutions for a reason. But no one foresaw that money == free speech == Bernay’s approach to getting elected == corrupt officials in all 3
      branches of the government, who would willingly work together
      instead of compete. Our checks and balances are now bribes and thumbs on the scale.

      Again, I would say we need to draft citizens for political service, instead of electing them (which has become impossible to clean up). It’d be like randomly drafting people to be sheriff’s deputies for a two year period — it’d be hard to keep kleptocratic control over randomly selected citizens who
      have to live with (and trade places with) their fellow citizens, and are just as likely to be non-sociopaths since they haven’t been selected via the money-driven election between red tweedledee and blue tweedledum.

      1. attempter

        we need to draft citizens for political service, instead of electing them

        Yes – then who is the “we” doing the drafting? The citizens who were already drafted, and so on?

        It sounds like you’re simply trying to come around to true democracy by a convoluted path. So let’s go by the straight path – all political power to community councils, period.

  5. attempter

    More academic noodling. If either rewards or punishments worked in these contexts, how do we always end up in the same place?

    The fact is, the kinds of political and economic institutions we have – states, corporations, anything hierarchical – inherently bring out and reward the worst behaviors – aggression, greed, lying, cheating, stealing. (And that’s leaving aside the legacy and wingnut welfare effects they also inevitably lead to.)

    You can’t reform a fundamentally flawed structure. Just to play along, who’s supposed to bring in this “hired gun”? The existing corrupt elites? And why would they institute any kind of new police* which was really meant to do anything but further entrench their own power?

    It would seem this idea implies a prior revolution which wipes out preceding institutions and then wants to start over with new, “better” institutions which include this majestically incorruptible hired gun.

    But the problem would still be the original problem: Hierarchical institutions themselves.

    *As always, this idea assumes hierachical rule where the group has to be policed from outside and above. Like I said, that’s intrinsic to the problem, and therefore can’t possibly be part of the solution.

    I won’t bother engaging with the disingenuous “peer” experiments mentioned in the piece. Those experiments are founded on a self-serving lie. They exemplify the same fallacy as the “tragedy of the commons”: They place the peers in a hostile, competitive environment, and then pretend to measure their ability to cooperate. When, with the deck stacked against them, they fail to cooperate well, the experiment exclaims in triumph, “Cooperation doesn’t work!” I think we can see the value of such “conclusions”.

    1. Tiercelet

      It seems a little unfair to criticize the study for failing to solve all the issues with cheaters in human social groups when we have 60,000 years of both biological and social evolution devoted to an arms race between cheaters and rule-enforcing communities. Moreover I don’t think the study authors claimed this system would scale, without alteration, to the level of the government of a modern nation-state. As always with academic disciplines, “further research needs to be done . . .”

      I think it’s incorrect to say we always end up in the same place. Modern law enforcement is often corrupt and biased, but it still tends to work better in most communities than intergenerational blood feuds. As for the study concept being inherently flawed — which part do you think is unrealistic? That people have choices between benefiting the group more or themselves more? That people are collectively better off if they all help each other? That people are individually better off if everybody else helps them but they only help themselves?

      Communication, and generally establishing reputation and playing this game multiple times with the same known players, improve people’s ability to cooperate. But that’s not interesting; game theory research has shown that decades ago. This study is about how we can structure rules systems so that groups cooperate better, even without those elements (which would presumably only help when added back in). As such, it’s useful within its scope, even though it fails to solve all social-organization problems everywhere.

      As to who watches the watchmen — ay, there’s the rub, eh?

      1. attempter

        Studies like this are flawed because they offer incentives to cheat which wouldn’t exist in a cooperative. (Not to mention that the subjects have grown up in and been accultured to a gangster society. And that’s prior to other selection biases in the subjects – ambitious, grasping college students, I imagine. Select the subjects from my relocalization group and I imagine you’ll get different results.)

        Modern law enforcement is often corrupt and biased, but it still tends to work better in most communities than intergenerational blood feuds.

        I’ll take my chances in a clan society over a “society” ruled by a militarized police/surveillance state any day of the week.

        1. ajax

          A collective boycott of a “worst offender” might be
          a viable second-best or alternative to the hired gun.

          I think boycotts can be an effective dis-encentive towards
          corporate bad behaviour. An example of this
          might be the Republic of South Africa under apartheid.

          Students at the University of California, Berkeley lobbied
          or pressured the University of California to divest from
          the Republic of South Africa. Divesting means pulling
          out of investments in stocks and bonds based in the
          Republic of South Africa (around 1985-1986).

          I make a rapprochement between boycotts and divestments.
          In the R.S.A.-Berkeley students story, I’m unsure as
          to whether (a) the University of California divested
          from the Republic of South Africa and (b) how much
          impact divestment(s) or threats of divestment(s) had
          on the situation in South Africa.

          It’s perhaps easier to identify a worst corporate
          offender if one out of many well-defined anti-progressive
          behaviours is selected for targeting, e.g.
          (a) environment-unfriendliness (b) consumer-unfriendliness
          via extremely complicated contracts (c) To be Determined.

  6. Scott

    Below are some approaches to trying to reduce outright fraud.

    (1) Audit the regulator.
    (2) Increase transparency of regulator in role. For example, all communications (E-mail, phone calls, etc.) could be available to the public. In today’s skeptical environment, the public would be pouring over those communications with the intent to discover auditor malfeasance.
    (3) Increase the standard for the regulator to “any appearance of inpropiety”.
    (4) Increase the penalties (including severity) for misconduct for both the industry participant and the regulator.
    (5) Increase the rewards for discovering and successfully prosecuting misconduct.
    (6) Use the public to perform some of the discovery legwork by making all reported suggestions of impropriety public record.
    (7) Diffuse the power (and thus cost of regulatory capture). For example, state level regulation (as opposed to federal regulation) significantly increases the cost of fraud.
    (8) Incorporate a rotation system (rotate who you regulate) so that regulatory capture is more limited.
    (9) Build incentives to “rat” on your competitor (not sure how to do this).

    With respect to the regulatory capture element where fraud is not involved, that one is quite a bit more challenging. How do you prevent an industry group creating legislation/rules that benefit them?

  7. Eli Baker

    A great psychologist, Tolman. famously said that students are not people. Much research has proven to be faulty because of the immaturity of the subjects.


  8. Patricia

    When I chaired a department at an art school, I first got rid of teachers who didn’t care (needed to compose initial elementary course/teaching requirements—there were none), then gathered the rest to discuss department curriculum. I then took the authority to collate, alter, establish the curriculum.

    Once curriculum was established, I re-gathered faculty to discuss best teaching practices. Again, I took the authority to collate, alter, and establish practices. From this, I made a teacher evaluation form, which was sent to all faculty and was used in irregular chairperson drop-ins. Also at this gathering, we composed student evaluations, which were given at end of each course with clear admonitions that students care about their education. I reviewed student evaluations with each faculty annually.

    I tried having other faculty do drop-in evaluations, too, but this caused too much strife, so dropped it. At one point, I had complaints about the teacher evaluation form I’d composed, so we gathered to rework it, and out of that meeting, we also set up a format for “retiring” teachers when they didn’t perform well over time. Additionally, we established a lottery that allowed one faculty member to choose best student work from all classes for end-of-semester show.

    Every two years, faculty were gathered to review both curriculum and teaching practices. This helped us develop understanding of how we could complement individual methods for broadest/richest student experience. It also helped us move the system along, since things are always in flux.

    We were working on a procedure for advancement of rank/salary, trying to take that out of the academic dean’s office and put it in the hands of the faculty, when I became sick and had to leave.

    Seemed to work ok. It depends on the chairperson setting up an atmosphere of cooperation towards the central goals which are not the person him/herself but the education of the student. Not an easy task among a bunch of artists who are generally known for ego-centrism.

  9. Anonymous Jones

    Wow. It seems like the NC commentariat is on to the idea that there is no magic, bullet-proof solution!


    You know how you avoid all the pitfalls of any solution? You don’t!

    Here’s an outrageous idea. How about we use the full toolbox of solutions, tool by tool depending upon the problem at hand?

    Maybe we could try to incentivize behavior we collectively deem good. Maybe we could also use low cost punishment solutions like hired guns trained at worst offenders of behavior we collectively deem unwanted. Maybe we could also use constant vigilance over the agents who dole out benefits and mete out punishment (seriously, ever had employees? you realize you have to watch over them, right (some for being lazy, some for being the opposite, as overzealousness can be a team killer)? this duty for vigilance never ends, you understand that? you can’t just depend upon it functioning without hard work on your part monitoring and correcting problems).

    Oh, I’m being stupid again. Sorry. My bad.

    1. Patricia

      Seems to me that hired guns are necessary only when the system itself has spectacularly failed. In a reasonably functional system, “tools” for handling perpetual offenders are already in place, to be used as needed.

      I’ve not noticed that NC’ers are particularly rigid.

  10. Dan Duncan

    OK Yves (and the social scientists working for U Cal at San Diego), you’ve had your fun. Clearly it’s time to let everyone in on your little “study”. You don’t want this to get away from you and turn into another unethical and “shocking” Milgram Experiment.

    Clearly this post was written for the purposes of studying how people respond to blatantly obvious sham studies.

    The premise (of the real study) goes like this: Publish the results of a completely nonsensical “study”. Pepper the sham study with the most ridiculous, tedious and nauseating academic nonsense.

    Then, let the fun begin… as these scientists measure the results to the following questions:

    1. Will people actually believe that “scientists” would actually publish this shit?

    2. How much effort will people put forth to refute what is obviously the worst sort of academic trash?

    3. If these fools take this shit seriously, how far can “scientists” take the academic puke spewing forth from universities to numb the minds of the masses so they will be unable to think and question authority?

    4. What would happen if we followed up this sham study with real figures on Student Loan Debt and the actual debt-slavery going on with an entire generation of students? Would people actually make the connection that academia in 2011 is one of the greatest scams in the history of man?

    To quote Mr. Spock: Fascinating.

  11. Externality

    The authors’ theory was the concept behind homeowners associations. Neighbors would be spared the burden of dealing with difficult neighbors by outsourcing the matter to the association and increasingly, to private contractors and professionals. Disinterested professionals, not bickering neighbors, would handle disputes and enforce community standards.

    What happened?

    A handful of residents wield the process to their own advantage, while other residents obsessively denounce their neighbors for de minimis violations of the rules because “rules are rules.” The hired gun, who wants to stay the hired gun, begins punishing trivial, technical violations of the HOA rules to please the vocal residents and justify their job. Homeowners find themselves written up or fined for a few dandelions on a one acre (0.4 hectare) lot or having a driveway that is, in one spot, an inch too narrow.

    Hired guns also have an incentive to find misconduct to justify their jobs and to expand the definition of sanctionable misconduct. When crime is up, hired guns see that is proof they are needed; when crime is down, hired guns see that as evidence that they are doing a good job and are needed to prevent crime. They also have an incentive to expand the definition of crime: police and correctional officers unions in California strongly support the War on Drugs and help fund professional “victim” groups that want to further criminalize everything. The same is true of HOAs: as neighborhoods improve, a wider and wider range of behavior results in fines.

    When the hired gun option is available, people stop using peer punishment. Just as someone won’t complain personally to messy neighbours, but instead directs complaints to the superintendent, when hired guns are available people stop using vigilantism to enforce good behaviour.

    In my experience, most American landlords hate inter-tenant disputes, do their best to discourage complaints of this type, and expect neighbors to try to work things out informally before approaching the management with noise and other complaints. The landlord’s goal is to make money by renting apartments, not enforcing rules for their own sake. A tenant who repeatedly denounces their neighbors’ minor lease violations soon finds themselves targeted for eviction. It is cheaper, after all, to kick out the complaining tenant than to write up or evict the rest of the building.

  12. Glenn Condell

    The most important requirements in reducing bad behaviour are first, that the boundaries of behaviour are set at a few agreed baseline ethical standards rather than by endlessly negotiated and eventually mind-bogglingly detailed regulations. So that the great GS customer rip-off couldn’t be safely redirected into years of legal maneuvring. Baseline standards would include ‘not lying to or misleading other parties’ and guilt as obvious as this couldn’t be muddied by buying the legal process. Peer groups of course cannot be allowed to do this themselves (been there, done that) so the question then is, who? Political or judicial or ‘grass roots’ community reps?

    Whoever, it leads to prescription number two. Perps must face their victims publicly, filmed and put on YouTube, and if they stonewall or sneer, that too becomes part of the record and of the case against them in the public mind.

    Part of the problem right now is that these 150,000 odd people in the top 0.5% who are driving us off the cliff are invisible, apart from your Kochs and Scaifes etc. There is not even the price of personal public opprobrium to pay for their crimes; in fact where they are noticed at all they are still feted and fussed over, but generally they continue to wreck their country in absolute silence, quietly amassing more wealth at the expense of their country’s future, their hirelings in politics, media, the judiciary and the Fed gaming things so they don’t have to get their hands dirty and can continue to sail miles above the fray, like the Gods of ancient Greece, sending the occasional thunderbolt down to keep the mortals in line.

    It’s like the war damage photos we cannot be allowed to see on our paper’s front pages – all it would take would be a week of front page pics of babies we have blown up in the past few years to end the wars. All it would take to turn the tide in banking would be Blankfein and Dimon and the rest to publicly face a series of Americans destroyed by their behaviour. Sophistry in response to Sen Levin is one thing, but to tearful old ladies or spunky young couples who have been foreclosed after being imMERSsed..

    Too vague I know, but it seems to me that the power of all the collective hand-wringing we do just turns into vapour, partly because although we ‘know our enemy’, we don’t really know them at all.

  13. Costard

    History is utterly clear on this point: men who believe in the value of what they do, will do it well. Whereas the stick and the carrot, in the hands of an arbitrary authority, are equally contemptuous and ineffectual. Societies and organizations get the behavior they deserve. Hire a gun or buy one; either way, recognize whom the last bullet is reserved for.

    Most of our endeavors are a monument to greed and vanity; leaders are selected accordingly. I would not waste too much grief over the fact that such lies are not taken seriously, and that people prefer their own happiness – however society judges it – to the whims and inclinations of a changeful world.

  14. Valissa

    4 words are missing from the above study that render it questionable: sociology, sociologist, anthropology, anthropologist. Why are economists doing the work of another field of study? and doing it rather uselessly? Various cultures and various types of social groups over the millenia have found ways to influence the behavior of “others” in order to satisfy their cultural norms. The fields of sociology and anthropology are most concerned with group behavior and group norms and have done a huge amount of work in this area. I’m sure an empirical survey of those would turn up all sorts of group behavior influencing techniques. Economists need to do more interdisciplinary work.

    more economist jokes…

    We have 2 classes of forecasters: Those who don’t know and those who don’t know they don’t know.
    — John Kenneth Galbraith

    They say that Christopher Columbus was the first economist. When he left to discover America, he didn’t know where he was going. When he got there he didn’t know where he was. And it was all done on a government grant.

    1. ajax

      Valissa: “Economists need to do more interdisciplinary work.” I think that’s a good idea…

      There’s a book by George Akerlof and Rachel Kranton
      whose full title is: “Identity Economics: How Our
      Identities Shape Our Work, Wages, and Well-Being”.

      They mention a court case, Price Waterhouse v. Hopkins,
      where Hopkins, an employee who brought a lot of business
      for her firm, wasn’t offered partnership. Her advisor
      offered: Hopkins should “walk more femininely, talk more femininely, dress more femininely, wear make-up, have her hair styled, and wear jewelry.”

      A rational firm would only look at the bottom line …
      But in fact economic decisions of all sorts depend partly on
      internalized norms; group norms, social norms and gender
      norms. I hope this gives some idea of what the authors
      mean by “Identity Economics”.

  15. JCC

    Interesting article and interesting comments. One thing that struck me about all this is how “American” the study is.

    The Hired Gun study here immediately brought to mind Palladin, Marshal Dillon, Sam Spade, Philip Marlowe… they all were great and just slightly flawed “Hired Guns”, impartial, honorable, morally just… and fictional.

    The comments brought to mind, for the most part – Patricia and a couple of others excepted – Judge Roy Bean, J Edgar Hoover…

    The study seems to me a classic fictional Justice System, “American Style”, without taking any account of the reality, unfortunately, of many of our most famous, and actual, Hired Guns.

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