Committing to moral principles can be a good strategy if a sufficient number of other people in your social environment share these principles: it will reduce your transaction costs in social cooperation. Commitment adds a recognition sign to the paradigmatic Tit-for-Tat model in game theory: if you can commit to cooperate, others will incur less risk in cooperating with you, and everybody will be better off. (Robert Axelrod’s 1984 book The Evolution of Cooperation, which developed a simple model without the possibility of communication, generated a voluminous literature). In other words, if you are virtuous and enough others in your environment are too, virtue signaling is a good strategy. If others know that you are in the habit of honesty and decency, your life will be easier.
With respect to a free society, committing to principles of reciprocity among natural equals (to use James Buchanan’s terms) will also contribute to maintaining or developing that society. This is a major idea in Buchanan’s Why I, Too, Am Not a Conservative; I think it is approximately translatable in Hayekian terms. This small book by Buchanan is a good and non-technical introduction to his ethical theory but (trigger warning!) you may be challenged.
The idea of committing to moral principles even has implications for the conduct of war. Trying to occupy the high moral ground in wartime may not lead the enemy to compete for the top of the barrel: after all, if your group is waging a just war, moral principles are probably not the enemy’s strong point. However, the moral principles that political leaders signal may help keep some human decency in their soldiers, which will be useful after demobilization. Furthermore, this strategy will certainly economize on the capital of support from other people with moral principles in the world. (Buchanan and Hayek were probably less radical than the ideas I am expressing in matters of war, but I would be surprised if they wouldn’t have agreed with this paragraph.)
READER COMMENTS
Monte
Nov 4 2023 at 5:39pm
Thanks for this post, Pierre. A valuable lesson in humility!
While cooperation and reciprocal altruism may temporarily reduce the payoff to the player of principle, game theory has shown that consistency of these behaviors ultimately prevails on each party.
Mostly in dealing with others, but always in dealing with self (ie. honesty is the best policy, truth is its own reward).
Even if selflessness is, as some claim, “only an illusion of self-interest”, behaving altruistically often elicits reciprocation.
Pierre Lemieux
Nov 4 2023 at 7:08pm
Monte: I would perhaps add to your last sentence that an ethic of reciprocity does not require altruism. Buchanan (like most political economists close to the classical liberal tradition) assumes, at least for the purpose of analysis, that the individual acts in his own interest. Hayek wrote (I quote from the postscript to his The Constitution of Liberty, where he borrows his own quote from his Individualism and Economic Order):
Monte
Nov 4 2023 at 8:11pm
How cynical. From “What is Man and Other Essays” by Mark Twain:
Thomas L Hutcheson
Nov 5 2023 at 12:03pm
Self interest can mean many things. I don’t think we should be ashamed to expect an appeal to a reasonable degree of altruism. Through no fault of my own, incentives for me to act “self-interestedly” may be misaligned with the greater good.
Pierre Lemieux
Nov 5 2023 at 1:56pm
Thomas: I think that economists would generally define self-interest as the absence of the utility of others as an artument in one’s utility function. Brennan and Buchanan in The Reason of Rules emphasize that this utility of others is what the altruist supposes it is (self-interestedly or not) since he is not in the others’ heads. My main question to you, however, would be, What is the “greater good”? What you think it is? Or what you think the object of your altruism thinks it is? Or what Joe thinks it is?
Thomas L Hutcheson
Nov 7 2023 at 6:54am
The “greater good” in that formulation is whatever the claimant is arguing that it is.
I’m saying it is OK to argue for freer trade (or taxation of net CO2 emissions) because it raises real incomes in the long run, not that it raises the real income of the persons with whom one is arguing, and almost certainly not by enough for them to self-interestedly do anything politically to achieve it.
Matthias
Nov 4 2023 at 9:09pm
Game theory hasn’t shown what you claim. At least not universally. Certain conditions need to prevail.
Pierre Lemieux
Nov 4 2023 at 11:42pm
Matthias: I think that if you reread my post, you will see that I don’t claim that “game theory” proves my claim. A good book to complement Axelrod is Robert Sugden, The Economics of Rights, Co-operation and Welfare, if you are interested in the use of game theory in economics (and political philosophy).
Monte
Nov 5 2023 at 1:41am
While cooperation and altruism do not always prevail in evolving games, they more frequently do, according to Proceedings from the National Academy of Sciences (PNAS).
Cynics like Hayek, Buchanan, and Twain maintain that humans are always motivated by self-interest, or Psychological Egoism (PE). As an optimist, I believe (as an opponent of PE) that “altruism occurs for altruism’s sake, or is caused by a non-selfish reason.”
Jon Murphy
Nov 5 2023 at 7:53am
I cannot speak for Twain, but I know Hayek and Buchanan would object to your characterization of them here. There are many human motivations beyond self interest.
Monte
Nov 5 2023 at 10:20am
Maybe you’re right. A cynic is a person who believes that people are motivated purely by self-interest rather than acting for honorable or unselfish reasons. And although we find in a lot of their works self interest as an explanation for why people behave the way they do, Hayek and Buchanan can perhaps more accurately be characterized as skeptics:
Jon Murphy
Nov 5 2023 at 11:27am
Oh, I am certainly right. Even a quick reading of Hayek and Buchanan show that they do not think self-interest is people’s only, or even major, motivation. Self-interest is a modeling assumption, and one that applies only in certain institutional relationships (see Buchanan’s paper “Politics, Policy, and the Pigouvian Margins” for one such example).
On a broader note, it is a mistake to claim that self interest is mutually exclusive from honor or unselfish reasons. Honor and selflessness are virtues. Thus, one can act honorably for self-interested reasons.
In short, do not mistake a modeling assumption with a normative claim. It’s like saying physics claims that the world exists in a vacuum just because air resistance is often ignored in certain models.
Pierre Lemieux
Nov 5 2023 at 1:46pm
Monte and Jon: This issue of altruism has many dimensions and refinements. Just a few points that may be useful.
(1) Hayek agrees with Monte’s mention of skepticism: “The liberal differs from the conservative in his willingness to face this ignorance and to admit how little we know, without claiming the authority of supernatural sources of knowledge where his reason fails him. It has to be admitted that in some respects the liberal is fundamentally a skeptic.” (Postcript of The Constitution of Liberty)
(2) Altruism fits well in a pure logic on choice but not in a predictive theory of behavior, where the maximand needs to be more precise. Otherwise, we are basically saying that the individual does what he does. Brennan and Buchanan’s The Reason of Rules is useful in that regard (notably chapter 3). At any rate, they note, an altruistic act can only be what the altruist thinks will be beneficial to the beneficiary; there is an unavoidable knowledge problem.
(3) In the last chapter of that book, Brennan and Buchanan argue that, although altruism is not required for the social contract or the working of the free, post-contract society, it is required for constitutional reform because the free-rider problem in collective action becomes paramount.
Matthias
Nov 4 2023 at 8:59pm
The condition of your second sentence is not strictly speaking necessary.
If your believe in the flying spaghetti monster credibly commits you to be honest to a fault, that will be useful in your business dealings, even if everyone else thinks the flying spaghetti monster is silly. As long as they believe that you are committed.
Even more directly, a reputation for honesty is valuable even in a society of liars. Actually, it’s more valuable in a society of liars: because of supply and demand there are services like arbitration and escrow that an honest man can offer much cheaper and more efficiently. And if you are the only honest man, you’ve got that market cornered.
However, you are right that for certain other moral commitments, they are more valuable if other people share them. Eg avoiding caffeine or pork won’t help you directly in any game theoretic sense (though it might indirectly help you show commitment).
Btw, game theory doesn’t reward all moral commitments, especially not unconditionally. Not even honesty.
There needs to be a certain ability to build up a reputation. Either from repeat encounters or from gossiping between parties or from legal liability etc.
Mactoul
Nov 4 2023 at 11:02pm
In evolution quite the reverse is taught. Where males are predominantly dads, being a cad pays. Of course, spread of cad genes reduces the payoff of cad strategy (as females get wiser) and then being a dad pays.
The resultant is known as evolutionary stable strategy.
Monte
Nov 5 2023 at 8:51pm
As Matthias mentioned above, certain conditions must prevail, the most important of which is cost. Using your example, if the costs of being a cad outweigh the benefits of being a dad, game theory demonstrates that being a dad becomes the ESS and is consistent with evolution through natural selection.
jdgalt
Nov 5 2023 at 2:04pm
Any discussion of moral principles as an investing strategy should at least touch on the completely fake and self-serving so-called moral principles of WEF known as ESG. It seems to me self-evident that any company pursuing ESG goals is doing so at the expense, and to the detriment, of its own stockholders and (I hope) will quickly change its ways or go broke.
Pierre Lemieux
Nov 6 2023 at 10:49am
JD: I think that moral principles should at least be consistent with methodological individualism. I also think, with Buchanan and his analytical tradition, that they should be founded on an individualist ethics. What you say would follow (in an area downstream from what I was talking about).
In my review of Brennan and Buchanan’s The Reason of Rules, I wondered if “Hayek’s shortcut isn’t more realistic than an elaborate contractarian construction.” It’s more a question than a statement.
Craig
Nov 5 2023 at 2:08pm
“The idea of committing to moral principles even has implications for the conduct of war. ”
I’m just out in the shade watching the world go up in flames.
steve
Nov 5 2023 at 6:16pm
John Boyd, creator of the OODA Loop thought the moral aspect of war important.
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Another important aspect of Boyd’s account of strategy is his emphasis on moral warfare. Like many of his ideas, this accords with his interest in and interpretation of Sun Tzu, the classical Chinese strategist.
Here, the moral doesn’t strictly mean the ethical sense, right and wrong. Boyd defined it in The Strategic Game of ? and ?as “the cultural codes of conduct or standards of behavior that constrain, as well as sustain and focus, our emotional/intellectual responses.”
To put it simply, the moral aspect of war or conflict can be described in terms of trust. If we are teammates or allies, can we trust each other? Do our enemies trust each other? Trust leads to effective collaboration and coordination; mistrust leads to failure. Therefore, the side with more shared trust will succeed.
The moral dimension of war can be weaponized. We can preserve the trust we have internally, while working to sow distrust amongst our enemies. One of the main ways this works is to point out the enemy’s hypocrisy, especially to their followers or citizens. Conversely, preserving one’s own integrity is a way to protect shared trust and therefore effectiveness.
https://tasshin.com/blog/the-strategic-theory-of-john-boyd/
Libertarians might like his management theory.
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One of Boyd’s famous quips was “People, ideas, hardware—in that order.” Boyd vehemently argued that “Machines don’t fight wars. Terrain doesn’t fight wars. Humans fight wars. You must get into the minds of humans. That’s where the battles are won.”
Because people are more important than ideas or hardware (including firepower, manpower, sheer quantitative superiority, etc.), one must understand psychology, leadership, and management.
From this perspective, micromanagement is poisonous. As Boyd said, “the more you try to control people, the less control you get.”
Steve
Pierre Lemieux
Nov 6 2023 at 11:22pm
Steve: Thanks for the reference to Boyd. Which book of his do you recommend? For an economic approach (which seems to have some interface with Boyd’s), have a look at Geoffrey Brennan and Gordon Tullock, “An economic theory of military tactics: Methodological individualism at war,” Journal of Economic Behavior & Organization 3, 2-3 (1982). The short abstract gives a good impression of the article, and its interface with Boyd:
Its use of the economic methodology is very instructive–for example:
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