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Self-interest versus group interest

People are less willing to give up an interest when in a negotiation situation than when they can do it of their own free will, as Leiden University psychologist Eric van Dijk discovered. Knowledge of this kind can be used by policy makers, for instance, to motivate people to adopt certain desirable behaviour.

What decisions do individuals make when they have to weigh their immediate self-interest against a long-term collective interest? And what factors influence these decisions? Leiden psychologists design experiments to discover how people deal with social dilemmas, in an attempt to find patterns in human behaviour.

Research on behavioural economics: how much money do you put in the pot?

Self-interest versus the common good

It’s very tempting to be guided by self-interest: keeping vital information to yourself, making long-distance flights whenever you like,not declaring income to the tax authorities. Yet we all benefit if everyone also thinks about shared interests. After all, if no-one paid taxes there would be no hospitals, and without cooperation there would be no profit.

Behavioural economics

Economics is based on conflict. To understand how people weigh up their decisions, you need insight into both economics and psychology. Leiden University offers research and teaching at the interface between these two fields. Behavioural economics is a new discipline where economics meets psychology, exposing the fundamental structures of human social behaviour. Insights from behavioural economics first started to be taken seriously by policy makers about eight years ago. It may have been because they were trying to motivate people to reduce energy consumption, or to minimise food waste. What are the strategies that work? This is the question that behavioural economists try to answer. In order to discover the principles of social decision making, psychologist and economist Eric van Dijk designs games. For example: in a group of experimental participants, everyone is given ten euros. Each of them must then decide how much of this to put into a collective pot. The total amount put in will be doubled and shared out equally among all the participants. Someone who decides to put nothing into the pot will lose the least of his/her own money and still gain just as much as the other group members from the doubled pot. In other words, a lucky winner. Unless, of course, all the other participants also decide to put nothing in. Then the whole group will miss out on a big reward.

Mutual dependence

Experiments of this kind are deliberately done in the laboratory, where the participants receive feedback via a monitor and do not see each other. Any context that might distract from fundamental choices between self-interest and other people’s interest is stripped away. After all, the experiment is not about who is environmentally aware, or whether participants like each other. The aim is purely to find out what mutual dependence does to a group of people. Negotiations, the effect of sanctions, trust… all these social phenomena can be modelled in a game. One of the surprising results of this kind of research is that different norms apply when participants have to contribute to a collective pot than when they can take from a collective pot. In the latter case, everyone takes the same amount and this is generally regarded as fair, even if some group members are richer than others. In the former case, however, people are expected to put in according to their means, therefore the rich more than the poor. Another Leiden discovery is that people are less inclined to give other people money in a negotiation situation than if they can just give it to them. In a negotiation situation, they try to get as much as they can for themselves. But if the other person has no power, people tend to be generous. It has also been found that economic sanctions for selfish behaviour can sometimes have the opposite of the desired effect, because they undermine people’s trust in each other.

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