so first a word about my half beard so I went on a month-long hike on the Israel
went on a month-long hike on the Israel
went on a month-long hike on the Israel trail and decide not to shave that’s
trail and decide not to shave that’s
trail and decide not to shave that’s half of the story and then I I was
half of the story and then I I was
half of the story and then I I was burned many years ago I don’t have hair
burned many years ago I don’t have hair
burned many years ago I don’t have hair on the right side of my face so that’s
on the right side of my face so that’s
on the right side of my face so that’s the other half I’m not trying to make a
the other half I’m not trying to make a
the other half I’m not trying to make a fashion statement okay so I want to talk
fashion statement okay so I want to talk
fashion statement okay so I want to talk about trust I want to talk about the
about trust I want to talk about the
about trust I want to talk about the importance of trust to society why is it
importance of trust to society why is it
importance of trust to society why is it so important and how do we get more of
so important and how do we get more of
so important and how do we get more of it now if you think historically we had
it now if you think historically we had
it now if you think historically we had lots of ways to increase trust in
lots of ways to increase trust in
lots of ways to increase trust in society we had things like a handshake a
society we had things like a handshake a
society we had things like a handshake a handshake is actually showing somebody
handshake is actually showing somebody
handshake is actually showing somebody you don’t have a weapon right if you
you don’t have a weapon right if you
you don’t have a weapon right if you come to somebody and you hand is out
come to somebody and you hand is out
come to somebody and you hand is out there in the open they know you not you
there in the open they know you not you
there in the open they know you not you don’t have a weapon
don’t have a weapon
don’t have a weapon they also clinging glasses saying the
they also clinging glasses saying the
they also clinging glasses saying the hind is also a question of trust the the
hind is also a question of trust the the
hind is also a question of trust the the story is that people use to mix the
story is that people use to mix the
story is that people use to mix the liquid between the two glasses maybe
liquid between the two glasses maybe
liquid between the two glasses maybe you’re trying to poison me let’s make
you’re trying to poison me let’s make
you’re trying to poison me let’s make sure that the liquid is spread between
sure that the liquid is spread between
sure that the liquid is spread between the two glasses
the two glasses
the two glasses this way I’ll know there’s not trust now
this way I’ll know there’s not trust now
this way I’ll know there’s not trust now that’s not real trust by the way but but
that’s not real trust by the way but but
that’s not real trust by the way but but still trust now
still trust now
still trust now trust I will try to argue this is a
trust I will try to argue this is a
trust I will try to argue this is a common good it’s everywhere and it’s
common good it’s everywhere and it’s
common good it’s everywhere and it’s incredible lubricant for society so
incredible lubricant for society so
incredible lubricant for society so let’s think for a second about what
let’s think for a second about what
let’s think for a second about what happens when we don’t have trust so I
happens when we don’t have trust so I
happens when we don’t have trust so I was recently in a country in South
was recently in a country in South
was recently in a country in South America and I went to buy a pen
America and I went to buy a pen
America and I went to buy a pen and I went to the counter I saw a pen I
and I went to the counter I saw a pen I
and I went to the counter I saw a pen I liked I pointed to it they person wrote
liked I pointed to it they person wrote
liked I pointed to it they person wrote me a little note I took that note and I
me a little note I took that note and I
me a little note I took that note and I went to a cashier I paid the cashier
went to a cashier I paid the cashier
went to a cashier I paid the cashier that amount of money and I got another
that amount of money and I got another
that amount of money and I got another note I went to a third person I gave him
note I went to a third person I gave him
note I went to a third person I gave him the second note and he gave me the pen
the second note and he gave me the pen
the second note and he gave me the pen now why do they need three people to
now why do they need three people to
now why do they need three people to sell a $15 pen because they don’t trust
sell a $15 pen because they don’t trust
sell a $15 pen because they don’t trust anybody right the person who runs this
anybody right the person who runs this
anybody right the person who runs this Renda store did not want anybody to hold
Renda store did not want anybody to hold
Renda store did not want anybody to hold the pen and the money at the same time
the pen and the money at the same time
the pen and the money at the same time so they created this incredible
so they created this incredible
so they created this incredible elaborate process because there was no
elaborate process because there was no
elaborate process because there was no trust and if you think about your own
trust and if you think about your own
trust and if you think about your own your own lives think about the role
your own lives think about the role
your own lives think about the role trust plays what happens in society
trust plays what happens in society
trust plays what happens in society without without trust you have to have a
without without trust you have to have a
without without trust you have to have a contract for everything everything is
contract for everything everything is
contract for everything everything is complex you don’t trust anybody
complex you don’t trust anybody
complex you don’t trust anybody everything is incredibly difficult by
everything is incredibly difficult by
everything is incredibly difficult by the way one of the most bizarre things
the way one of the most bizarre things
the way one of the most bizarre things about trust have it ever happen to you
about trust have it ever happen to you
about trust have it ever happen to you that you’re in the airport and you to go
that you’re in the airport and you to go
that you’re in the airport and you to go to the bathroom and you say to somebody
to the bathroom and you say to somebody
to the bathroom and you say to somebody would you watch my bag I’m going to this
would you watch my bag I’m going to this
would you watch my bag I’m going to this we study that actually so first of all
we study that actually so first of all
we study that actually so first of all it’s amazing if you think about it
it’s amazing if you think about it
it’s amazing if you think about it because what you’re really telling that
because what you’re really telling that
because what you’re really telling that person is if you’re thinking about
person is if you’re thinking about
person is if you’re thinking about stealing my bag now is the right time
but we actually asked asked the question
but we actually asked asked the question and it turns out that the person who
and it turns out that the person who
and it turns out that the person who said yes I’ll watch your bag actually
said yes I’ll watch your bag actually
said yes I’ll watch your bag actually feels committed to their promise right
feels committed to their promise right
feels committed to their promise right it’s just an empty promise to somebody
it’s just an empty promise to somebody
it’s just an empty promise to somebody you’ll never meet again but people still
you’ll never meet again but people still
you’ll never meet again but people still stick to it so try it out okay so Trust
stick to it so try it out okay so Trust
stick to it so try it out okay so Trust is incredibly important now to think
is incredibly important now to think
is incredibly important now to think about trust I want to tell you about a
about trust I want to tell you about a
about trust I want to tell you about a game we call the public goods game the
game we call the public goods game the
game we call the public goods game the public goods game and here’s how the
public goods game and here’s how the
public goods game and here’s how the game works I’ll give you one version of
game works I’ll give you one version of
game works I’ll give you one version of it okay
it okay
it okay in this version we have ten people ten
in this version we have ten people ten
in this version we have ten people ten people every morning that they wake up
people every morning that they wake up
people every morning that they wake up they get $10 each every morning they
they get $10 each every morning they
they get $10 each every morning they wake up to get $10 and they could decide
wake up to get $10 and they could decide
wake up to get $10 and they could decide what to do with that money they could
what to do with that money they could
what to do with that money they could put as much of it as they want in the
put as much of it as they want in the
put as much of it as they want in the public pool and they can keep as much as
public pool and they can keep as much as
public pool and they can keep as much as they want to themselves by the way this
they want to themselves by the way this
they want to themselves by the way this is anonymous game nobody sees anybody
is anonymous game nobody sees anybody
is anonymous game nobody sees anybody else people just put money into the
else people just put money into the
else people just put money into the public pool now the money in the public
public pool now the money in the public
public pool now the money in the public pool grows five times and then in the
pool grows five times and then in the
pool grows five times and then in the evening it’s equally divided by
evening it’s equally divided by
evening it’s equally divided by everybody right so what happens when you
everybody right so what happens when you
everybody right so what happens when you play this game life looks good people
play this game life looks good people
play this game life looks good people wake up they get $10 everybody puts
wake up they get $10 everybody puts
wake up they get $10 everybody puts their money in ten people $10 $100 by
their money in ten people $10 $100 by
their money in ten people $10 $100 by the evening the money is multiplied five
the evening the money is multiplied five
the evening the money is multiplied five times
times
times everybody gets $50 life is good this is
everybody gets $50 life is good this is
everybody gets $50 life is good this is what it is to live in a good society
what it is to live in a good society
what it is to live in a good society you’re contributing something to the
you’re contributing something to the
you’re contributing something to the public good the public good increases in
public good the public good increases in
public good the public good increases in value everybody benefits and people are
value everybody benefits and people are
value everybody benefits and people are happy okay
happy okay
happy okay and then one day this goes on for a
and then one day this goes on for a
and then one day this goes on for a while then one day one person puts zero
while then one day one person puts zero
while then one day one person puts zero and you probably all can think who who
and you probably all can think who who
and you probably all can think who who that person would be in from the people
that person would be in from the people
that person would be in from the people you know okay
you know okay
you know okay so what happens what happens when one
so what happens what happens when one
so what happens what happens when one person puts nothing nine people ninety
person puts nothing nine people ninety
person puts nothing nine people ninety dollars multiply five times four hundred
dollars multiply five times four hundred
dollars multiply five times four hundred fifty in the evening everybody gets
fifty in the evening everybody gets
fifty in the evening everybody gets forty five dollars right so you notice
forty five dollars right so you notice
forty five dollars right so you notice and one person has fifty five dollars
and one person has fifty five dollars
and one person has fifty five dollars right the person who betrayed the public
right the person who betrayed the public
right the person who betrayed the public good has their ten dollars but because
good has their ten dollars but because
good has their ten dollars but because the money is equally divided they get
the money is equally divided they get
the money is equally divided they get their x-default $45 plus their own ten
their x-default $45 plus their own ten
their x-default $45 plus their own ten that person betrayed the public good and
that person betrayed the public good and
that person betrayed the public good and benefited but here’s the question what
benefited but here’s the question what
benefited but here’s the question what happens the next day nobody puts
happens the next day nobody puts
happens the next day nobody puts anything now in economics we think about
anything now in economics we think about
anything now in economics we think about this game as a game with two equilibria
this game as a game with two equilibria
this game as a game with two equilibria okay what does it mean that it has two
okay what does it mean that it has two
okay what does it mean that it has two equilibria
equilibria
equilibria there’s one equilibria that everybody
there’s one equilibria that everybody
there’s one equilibria that everybody participates and then there’s not really
participates and then there’s not really
participates and then there’s not really where that nobody participates the
where that nobody participates the
where that nobody participates the situation in which 50 percent of the
situation in which 50 percent of the
situation in which 50 percent of the people participate in 50 not is not a
people participate in 50 not is not a
people participate in 50 not is not a stable situation so that’s one everybody
stable situation so that’s one everybody
stable situation so that’s one everybody contributes and nobody contribute these
contributes and nobody contribute these
contributes and nobody contribute these are the only two equilibria but the
are the only two equilibria but the
are the only two equilibria but the other thing to realize is that the good
other thing to realize is that the good
other thing to realize is that the good equilibria where everybody participates
equilibria where everybody participates
equilibria where everybody participates is incredibly weak it’s enough for one
is incredibly weak it’s enough for one
is incredibly weak it’s enough for one person to betray the public good and the
person to betray the public good and the
person to betray the public good and the whole thing deteriorates the solution in
whole thing deteriorates the solution in
whole thing deteriorates the solution in which nobody participates it’s
which nobody participates it’s
which nobody participates it’s incredibly strong equilibrium if two
incredibly strong equilibrium if two
incredibly strong equilibrium if two people all of a sudden start
people all of a sudden start
people all of a sudden start contributing nothing changes people
contributing nothing changes people
contributing nothing changes people don’t move and that’s actually a good
don’t move and that’s actually a good
don’t move and that’s actually a good analogy for society in general Trust is
analogy for society in general Trust is
analogy for society in general Trust is an incredibly important public good when
an incredibly important public good when
an incredibly important public good when we live in a society that we can trust
we live in a society that we can trust
we live in a society that we can trust people life is really wonderful but when
people life is really wonderful but when
people life is really wonderful but when some people betrayed the public good
some people betrayed the public good
some people betrayed the public good things deteriorate and then it’s very
things deteriorate and then it’s very
things deteriorate and then it’s very hard to change the situation so the
hard to change the situation so the
hard to change the situation so the point is the trust is a public good
point is the trust is a public good
point is the trust is a public good we’re all much much better off when we
we’re all much much better off when we
we’re all much much better off when we have trust the problem is the trust can
have trust the problem is the trust can
have trust the problem is the trust can deteriorate over
deteriorate over
deteriorate over just imagine that you lived in the
just imagine that you lived in the
just imagine that you lived in the country where some of your public
country where some of your public
country where some of your public officials behave you the less than
officials behave you the less than
officials behave you the less than perfect way right what does it what
perfect way right what does it what
perfect way right what does it what happens to the public trust or just
happens to the public trust or just
happens to the public trust or just imagine that you go somewhere and
imagine that you go somewhere and
imagine that you go somewhere and somebody says do you want to pay v8 imam
somebody says do you want to pay v8 imam
somebody says do you want to pay v8 imam or not right what happens to our
or not right what happens to our
or not right what happens to our understanding of what’s acceptable in
understanding of what’s acceptable in
understanding of what’s acceptable in society okay so now that we know the
society okay so now that we know the
society okay so now that we know the trust is important it’s a public code we
trust is important it’s a public code we
trust is important it’s a public code we can ask the question of how do we
can ask the question of how do we
can ask the question of how do we increase trust what can we do to
increase trust what can we do to
increase trust what can we do to increase trust and here’s a couple of
increase trust and here’s a couple of
increase trust and here’s a couple of ways to think about it
ways to think about it
ways to think about it the first game I’ll describe to you is a
the first game I’ll describe to you is a
the first game I’ll describe to you is a game I’m sure you all know called the
game I’m sure you all know called the
game I’m sure you all know called the prisoner’s dilemma game and just to
prisoner’s dilemma game and just to
prisoner’s dilemma game and just to repeat here’s the game the police
repeat here’s the game the police
repeat here’s the game the police catches you and one of your best friends
catches you and one of your best friends
catches you and one of your best friends they catch you they suspect that you’ve
they catch you they suspect that you’ve
they catch you they suspect that you’ve you’ve been a part of a criminal
you’ve been a part of a criminal
you’ve been a part of a criminal activity and they put you in two
activity and they put you in two
activity and they put you in two separate room and they start
separate room and they start
separate room and they start interrogating you and basically your
interrogating you and basically your
interrogating you and basically your question is in this in this case do you
question is in this in this case do you
question is in this in this case do you cooperate in this case it means you’re
cooperate in this case it means you’re
cooperate in this case it means you’re silent you cooperate with your friend
silent you cooperate with your friend
silent you cooperate with your friend not with the police or do you defect do
not with the police or do you defect do
not with the police or do you defect do you rat on your friends and give them up
you rat on your friends and give them up
you rat on your friends and give them up right that’s your dilemma stay loyal to
right that’s your dilemma stay loyal to
right that’s your dilemma stay loyal to your friend give them up and and there’s
your friend give them up and and there’s
your friend give them up and and there’s a payoff matrix we’ll go at it if if
a payoff matrix we’ll go at it if if
a payoff matrix we’ll go at it if if both people are silent right then each
both people are silent right then each
both people are silent right then each of you will get one year in prison you
of you will get one year in prison you
of you will get one year in prison you don’t say anything the other person
don’t say anything the other person
don’t say anything the other person don’t say anything the police has very
don’t say anything the police has very
don’t say anything the police has very weak evidence you’ll be a year in prison
weak evidence you’ll be a year in prison
weak evidence you’ll be a year in prison but but imagine you’re the red person
but but imagine you’re the red person
but but imagine you’re the red person and you ask yourself what what will the
and you ask yourself what what will the
and you ask yourself what what will the other person do you ask yourself what
other person do you ask yourself what
other person do you ask yourself what would the blue person do and you say
would the blue person do and you say
would the blue person do and you say well right now if I remain silent and
well right now if I remain silent and
well right now if I remain silent and the blue person is silent we each get
the blue person is silent we each get
the blue person is silent we each get one year but the blue person could
one year but the blue person could
one year but the blue person could benefit if they decide to rat and then I
benefit if they decide to rat and then I
benefit if they decide to rat and then I will get twenty years so what should I
will get twenty years so what should I
will get twenty years so what should I do
do
do I should rat as well so basically you
I should rat as well so basically you
I should rat as well so basically you have the dilemma if you trust the other
have the dilemma if you trust the other
have the dilemma if you trust the other person you would both remain silent and
person you would both remain silent and
person you would both remain silent and both of you would benefit justice of
both of you would benefit justice of
both of you would benefit justice of course will not benefit but you know you
course will not benefit but you know you
course will not benefit but you know you too would benefit
too would benefit
too would benefit but the problem is if you don’t trust
but the problem is if you don’t trust
but the problem is if you don’t trust the other person then you would both rat
the other person then you would both rat
the other person then you would both rat and everything would be worse for the
and everything would be worse for the
and everything would be worse for the two of you now you sit there and you
two of you now you sit there and you
two of you now you sit there and you make a decision and you can’t talk to
make a decision and you can’t talk to
make a decision and you can’t talk to your friend now here is the particular
your friend now here is the particular
your friend now here is the particular game I want to describe to you in this
game I want to describe to you in this
game I want to describe to you in this game some people play it in what is
game some people play it in what is
game some people play it in what is called the stranger condition they
called the stranger condition they
called the stranger condition they played with one person then another one
played with one person then another one
played with one person then another one then another one that not every game was
then another one that not every game was
then another one that not every game was a new game as if you met a new person
a new game as if you met a new person
a new game as if you met a new person every time and in the second condition
every time and in the second condition
every time and in the second condition you played with one person ten straight
you played with one person ten straight
you played with one person ten straight games now if you play ten straight games
games now if you play ten straight games
games now if you play ten straight games you have a chance to do what to build
you have a chance to do what to build
you have a chance to do what to build reputation the other person sees you
reputation the other person sees you
reputation the other person sees you they know you they know how to react the
they know you they know how to react the
they know you they know how to react the next time you have an opportunity to
next time you have an opportunity to
next time you have an opportunity to create reputation what happens well when
create reputation what happens well when
create reputation what happens well when you look at what happened in terms of
you look at what happened in terms of
you look at what happened in terms of what people choice in this stranger
what people choice in this stranger
what people choice in this stranger condition most people rat what do you
condition most people rat what do you
condition most people rat what do you think happened in the game where people
think happened in the game where people
think happened in the game where people have a chance to create reputation most
have a chance to create reputation most
have a chance to create reputation most people cooperated most people trusted
people cooperated most people trusted
people cooperated most people trusted their friend it’s actually slightly more
their friend it’s actually slightly more
their friend it’s actually slightly more interesting than that because if you
interesting than that because if you
interesting than that because if you look what happened over time it looks as
look what happened over time it looks as
look what happened over time it looks as if there are two periods in the first
if there are two periods in the first
if there are two periods in the first period the people in the partner game
period the people in the partner game
period the people in the partner game were much better this stranger because
were much better this stranger because
were much better this stranger because there was still building reputation and
there was still building reputation and
there was still building reputation and there was an opportunity to enjoy the
there was an opportunity to enjoy the
there was an opportunity to enjoy the reputation but if you look at the end of
reputation but if you look at the end of
reputation but if you look at the end of the game at the end of the game there’s
the game at the end of the game there’s
the game at the end of the game there’s no more value for reputation the game is
no more value for reputation the game is
no more value for reputation the game is ending and therefore people defected so
ending and therefore people defected so
ending and therefore people defected so if you only look at the first part of
if you only look at the first part of
if you only look at the first part of the game where there was real value for
the game where there was real value for
the game where there was real value for reputation people behaved much nicer so
reputation people behaved much nicer so
reputation people behaved much nicer so so what is the what is the lesson here
so what is the what is the lesson here
so what is the what is the lesson here the lesson is that when we think long
the lesson is that when we think long
the lesson is that when we think long term when we have some value from long
term when we have some value from long
term when we have some value from long term social interaction we behave much
term social interaction we behave much
term social interaction we behave much better of course you can think about
better of course you can think about
better of course you can think about something like eBay what is eBay doing
something like eBay what is eBay doing
something like eBay what is eBay doing with its reputational system it’s taking
with its reputational system it’s taking
with its reputational system it’s taking people who are interacting with each
people who are interacting with each
people who are interacting with each other in this stranger condition and say
other in this stranger condition and say
other in this stranger condition and say let’s create reputation a reputation
let’s create reputation a reputation
let’s create reputation a reputation system that will basically put all of
system that will basically put all of
system that will basically put all of those together as if there’s some
those together as if there’s some
those together as if there’s some residue to your interaction between one
residue to your interaction between one
residue to your interaction between one person to another
person to another
person to another okay so long-term relationship and
okay so long-term relationship and
okay so long-term relationship and reputation
reputation
reputation helps to increase
helps to increase
helps to increase there’s another way to increase trust
there’s another way to increase trust
there’s another way to increase trust and that I’ll describe with something
and that I’ll describe with something
and that I’ll describe with something called the trust game and here’s how the
called the trust game and here’s how the
called the trust game and here’s how the trust game works two people play a 1
trust game works two people play a 1
trust game works two people play a 1 player 2 both of them in separate rooms
player 2 both of them in separate rooms
player 2 both of them in separate rooms they don’t know each other they’ll never
they don’t know each other they’ll never
they don’t know each other they’ll never meet each other and you can’t to play a
meet each other and you can’t to play a
meet each other and you can’t to play a 1 and you say hey player 1 here’s $100
1 and you say hey player 1 here’s $100
1 and you say hey player 1 here’s $100 and now you can do two things with this
and now you can do two things with this
and now you can do two things with this hundred dollars you could decide to give
hundred dollars you could decide to give
hundred dollars you could decide to give it to the blue player and if you give it
it to the blue player and if you give it
it to the blue player and if you give it to the blue player the money will
to the blue player the money will
to the blue player the money will quadruple it will come from $100 it will
quadruple it will come from $100 it will
quadruple it will come from $100 it will become four hundred dollars or you can
become four hundred dollars or you can
become four hundred dollars or you can keep the money to yourself now ask
keep the money to yourself now ask
keep the money to yourself now ask yourself what should I do how much would
yourself what should I do how much would
yourself what should I do how much would you sell should you send anything should
you sell should you send anything should
you sell should you send anything should you send nothing what should you do well
you send nothing what should you do well
you send nothing what should you do well in this game what you should do is put
in this game what you should do is put
in this game what you should do is put yourself in the shoes of the other
yourself in the shoes of the other
yourself in the shoes of the other person and you ask yourself if I would
person and you ask yourself if I would
person and you ask yourself if I would send them the money will dice send it
send them the money will dice send it
send them the money will dice send it back and if you think the other person
back and if you think the other person
back and if you think the other person will send you back the money of course
will send you back the money of course
will send you back the money of course you’ll send it and if you think they’ll
you’ll send it and if you think they’ll
you’ll send it and if you think they’ll take the money and go home
take the money and go home
take the money and go home you’ll not send them the money right now
you’ll not send them the money right now
you’ll not send them the money right now just to be clear the economic prediction
just to be clear the economic prediction
just to be clear the economic prediction the standard rational economic
the standard rational economic
the standard rational economic prediction is that the other person
prediction is that the other person
prediction is that the other person would never send you money back why
would never send you money back why
would never send you money back why would they they would be better off to
would they they would be better off to
would they they would be better off to just take the money and go and go home
just take the money and go and go home
just take the money and go and go home and if you believe in perfect
and if you believe in perfect
and if you believe in perfect rationality you would think they will
rationality you would think they will
rationality you would think they will take the money and go home so let me not
take the money and go home so let me not
take the money and go home so let me not trust them in the beginning so and so
trust them in the beginning so and so
trust them in the beginning so and so what happens what actually happens is
what happens what actually happens is
what happens what actually happens is that people do send the money and people
that people do send the money and people
that people do send the money and people do reciprocate okay so so good news we
do reciprocate okay so so good news we
do reciprocate okay so so good news we are better than economic theory predicts
are better than economic theory predicts
are better than economic theory predicts we’re more trusting and more
we’re more trusting and more
we’re more trusting and more reciprocating as a side comment I should
reciprocating as a side comment I should
reciprocating as a side comment I should say that we we often use the term
say that we we often use the term
say that we we often use the term irrational in a negative sense that
irrational in a negative sense that
irrational in a negative sense that people are bad in some in some way and
people are bad in some in some way and
people are bad in some in some way and it’s true in many cases but in this
it’s true in many cases but in this
it’s true in many cases but in this particular case in the case in which
particular case in the case in which
particular case in the case in which were more trusting and more
were more trusting and more
were more trusting and more reciprocating the stand economic theory
reciprocating the stand economic theory
reciprocating the stand economic theory predicts it’s actually a good thing
predicts it’s actually a good thing
predicts it’s actually a good thing right you would not want to eliminate
right you would not want to eliminate
right you would not want to eliminate like if you could redesign you in beings
like if you could redesign you in beings
like if you could redesign you in beings you would not eliminate trust in
you would not eliminate trust in
you would not eliminate trust in reciprocation you might actually want to
reciprocation you might actually want to
reciprocation you might actually want to increase it okay so people are trusting
increase it okay so people are trusting
increase it okay so people are trusting people are reciprocating good news but
people are reciprocating good news but
people are reciprocating good news but not always not always sometimes
not always not always sometimes
not always not always sometimes the red player sends the money and the
the red player sends the money and the
the red player sends the money and the blue player goes home and here’s how
blue player goes home and here’s how
blue player goes home and here’s how things become slightly slightly more
things become slightly slightly more
things become slightly slightly more interesting this is where punishment and
interesting this is where punishment and
interesting this is where punishment and revenge come in so imagine that you’re
revenge come in so imagine that you’re
revenge come in so imagine that you’re they a red player and you send your
they a red player and you send your
they a red player and you send your hundred dollars to the blue player and
hundred dollars to the blue player and
hundred dollars to the blue player and the money quadrupled and then the blue
the money quadrupled and then the blue
the money quadrupled and then the blue player took all the money and went home
player took all the money and went home
player took all the money and went home and then I came to you and I say listen
and then I came to you and I say listen
and then I came to you and I say listen you just trusted that person you send
you just trusted that person you send
you just trusted that person you send them a hundred dollars they decide to
them a hundred dollars they decide to
them a hundred dollars they decide to take the money and go home but I’ll tell
take the money and go home but I’ll tell
take the money and go home but I’ll tell you what if you will give me Dan money I
you what if you will give me Dan money I
you what if you will give me Dan money I will go and I will hunt the blue player
will go and I will hunt the blue player
will go and I will hunt the blue player for you and I will take some of their
for you and I will take some of their
for you and I will take some of their money if you give me one dollar I’ll
money if you give me one dollar I’ll
money if you give me one dollar I’ll hunt them down and take two dollars away
hunt them down and take two dollars away
hunt them down and take two dollars away from them you’ll give me fifty I’ll hunt
from them you’ll give me fifty I’ll hunt
from them you’ll give me fifty I’ll hunt them for 100 now just to be clear you’re
them for 100 now just to be clear you’re
them for 100 now just to be clear you’re not making any money out of this deal
not making any money out of this deal
not making any money out of this deal you just lost a hundred dollars now you
you just lost a hundred dollars now you
you just lost a hundred dollars now you can lose more but with the benefit of
can lose more but with the benefit of
can lose more but with the benefit of getting the other person to lose even
getting the other person to lose even
getting the other person to lose even more now how many of you would go ahead
more now how many of you would go ahead
more now how many of you would go ahead and spend that money put yourself in
and spend that money put yourself in
and spend that money put yourself in that mindset you just spend a hundred
that mindset you just spend a hundred
that mindset you just spend a hundred dollars that person got $400 they went
dollars that person got $400 they went
dollars that person got $400 they went home I give you this offer to go into
home I give you this offer to go into
home I give you this offer to go into your checking account spend more money
your checking account spend more money
your checking account spend more money to make that other person suffer how
to make that other person suffer how
to make that other person suffer how many of you would take revenge okay
many of you would take revenge okay
many of you would take revenge okay about a third a little bit more and how
about a third a little bit more and how
about a third a little bit more and how many of you ever got divorced
many of you ever got divorced
many of you ever got divorced now now you can get the feeling right of
now now you can get the feeling right of
now now you can get the feeling right of what people because because because the
what people because because because the
what people because because because the truth is that it’s very hard to sit here
truth is that it’s very hard to sit here
truth is that it’s very hard to sit here and feel how offended we would be when
and feel how offended we would be when
and feel how offended we would be when somebody betrayed our trust but when
somebody betrayed our trust but when
somebody betrayed our trust but when somebody betrays our trust
somebody betrays our trust
somebody betrays our trust we would go to unbelievable extents to
we would go to unbelievable extents to
we would go to unbelievable extents to get them to suffer now now the thing is
get them to suffer now now the thing is
get them to suffer now now the thing is that revenge has kind of a social logic
that revenge has kind of a social logic
that revenge has kind of a social logic to it and and here is how the logic
to it and and here is how the logic
to it and and here is how the logic works so imagine that you and I were on
works so imagine that you and I were on
works so imagine that you and I were on a desert island and I had the mango and
a desert island and I had the mango and
a desert island and I had the mango and you wanted my mango
you wanted my mango
you wanted my mango if you thought I was perfectly rational
if you thought I was perfectly rational
if you thought I was perfectly rational you would say let me steal Dan’s mango
you would say let me steal Dan’s mango
you would say let me steal Dan’s mango I’ll run away he would not find me he
I’ll run away he would not find me he
I’ll run away he would not find me he would go and get a new mango but if you
would go and get a new mango but if you
would go and get a new mango but if you thought that I was revengeful that I
thought that I was revengeful that I
thought that I was revengeful that I would not sleep and I will not rest I
would not sleep and I will not rest I
would not sleep and I will not rest I will not eat I will not drink until I
will not eat I will not drink until I
will not eat I will not drink until I find you my mango and maybe take a
find you my mango and maybe take a
find you my mango and maybe take a banana from you you would not take my
banana from you you would not take my
banana from you you would not take my mango to start with now if you think
mango to start with now if you think
mango to start with now if you think about it in that regard imagine one of
about it in that regard imagine one of
about it in that regard imagine one of you would act negatively toward somebody
you would act negatively toward somebody
you would act negatively toward somebody else in the audience but you knew that
else in the audience but you knew that
else in the audience but you knew that if you do it
if you do it
if you do it everybody will be offended by that and
everybody will be offended by that and
everybody will be offended by that and everybody will jump on you that in a way
everybody will jump on you that in a way
everybody will jump on you that in a way is the version of the police and the
is the version of the police and the
is the version of the police and the justice system that is coded is part of
justice system that is coded is part of
justice system that is coded is part of our moral code right the outrage that we
our moral code right the outrage that we
our moral code right the outrage that we feel and our willingness to take revenge
feel and our willingness to take revenge
feel and our willingness to take revenge is actually an old version of the police
is actually an old version of the police
is actually an old version of the police and the judicial system at once we would
and the judicial system at once we would
and the judicial system at once we would punish somebody for for offending us so
punish somebody for for offending us so
punish somebody for for offending us so what happened yes do people take revenge
what happened yes do people take revenge
what happened yes do people take revenge absolutely and even more interestingly
absolutely and even more interestingly
absolutely and even more interestingly when people execute and plan revenge
when people execute and plan revenge
when people execute and plan revenge their brain shows similar activity to
their brain shows similar activity to
their brain shows similar activity to pleasure
I’m not recommending it but just so you
I’m not recommending it but just so you know there is something like project
know there is something like project
know there is something like project click ok and and finally I would also
click ok and and finally I would also
click ok and and finally I would also say something about revenge in some
say something about revenge in some
say something about revenge in some sense if you think about revenge in this
sense if you think about revenge in this
sense if you think about revenge in this game it’s altruism why altruism is
game it’s altruism why altruism is
game it’s altruism why altruism is something that we do selfishly in this
something that we do selfishly in this
something that we do selfishly in this case you would teach this bastard a
case you would teach this bastard a
case you would teach this bastard a lesson like you would never get to
lesson like you would never get to
lesson like you would never get to benefit from that again you’ll never
benefit from that again you’ll never
benefit from that again you’ll never meet and you don’t know who they are but
meet and you don’t know who they are but
meet and you don’t know who they are but you will go into your checking account
you will go into your checking account
you will go into your checking account you would spend money to teach that
you would spend money to teach that
you would spend money to teach that person a lesson so they interact better
person a lesson so they interact better
person a lesson so they interact better with other people down the line so so
with other people down the line so so
with other people down the line so so how can we increase trust long-term
how can we increase trust long-term
how can we increase trust long-term relationship reputation and even revenge
relationship reputation and even revenge
relationship reputation and even revenge I’ll end with two more tricks for trust
I’ll end with two more tricks for trust
I’ll end with two more tricks for trust economists by the way I always puzzled
economists by the way I always puzzled
economists by the way I always puzzled by why people leave tips especially in
by why people leave tips especially in
by why people leave tips especially in restaurants and cities that people don’t
restaurants and cities that people don’t
restaurants and cities that people don’t intend to go why would you ever leave a
intend to go why would you ever leave a
intend to go why would you ever leave a tip but what we do and we leave tips in
tip but what we do and we leave tips in
tip but what we do and we leave tips in very similar magnitude to restaurants we
very similar magnitude to restaurants we
very similar magnitude to restaurants we intend to go back to but in this
intend to go back to but in this
intend to go back to but in this particular study imagine a waiter comes
particular study imagine a waiter comes
particular study imagine a waiter comes to you there are four people in the
to you there are four people in the
to you there are four people in the table
table
table they can’t wait to come to the first
they can’t wait to come to the first
they can’t wait to come to the first person and the first person says I want
person and the first person says I want
person and the first person says I want to fish and the person says now don’t
to fish and the person says now don’t
to fish and the person says now don’t take the fish it’s too expensive and not
take the fish it’s too expensive and not
take the fish it’s too expensive and not so good take the chicken and then what
so good take the chicken and then what
so good take the chicken and then what happens to the waiters recommendation to
happens to the waiters recommendation to
happens to the waiters recommendation to everybody else they accept all the
everybody else they accept all the
everybody else they accept all the recommendations why because the way to
recommendations why because the way to
recommendations why because the way to show that they’re willing to sacrifice
show that they’re willing to sacrifice
show that they’re willing to sacrifice their personal utility I told take
their personal utility I told take
their personal utility I told take something cheaper demonstrating that we
something cheaper demonstrating that we
something cheaper demonstrating that we have aligned interest right now what
have aligned interest right now what
have aligned interest right now what would happen if the waiter somebody says
would happen if the waiter somebody says
would happen if the waiter somebody says I want the fish and the way that chemist
I want the fish and the way that chemist
I want the fish and the way that chemist said ah don’t take the fish take the
said ah don’t take the fish take the
said ah don’t take the fish take the lobster it’s twice as much and it’s a
lobster it’s twice as much and it’s a
lobster it’s twice as much and it’s a little bit better how much would
little bit better how much would
little bit better how much would everybody else would trust them not that
everybody else would trust them not that
everybody else would trust them not that much the point is that basically showing
much the point is that basically showing
much the point is that basically showing that we have the other person interest
that we have the other person interest
that we have the other person interest in mind and we’re willing to sacrifice
in mind and we’re willing to sacrifice
in mind and we’re willing to sacrifice some of our own utility for that is a
some of our own utility for that is a
some of our own utility for that is a trust creating exercise
trust creating exercise
trust creating exercise and they’ll tell you one last piece of
and they’ll tell you one last piece of
and they’ll tell you one last piece of personal advice on increasing trust so I
personal advice on increasing trust so I
personal advice on increasing trust so I told you I went hiking on the Israel
told you I went hiking on the Israel
told you I went hiking on the Israel trail it was a great great month and
trail it was a great great month and
trail it was a great great month and during that month I invited some people
during that month I invited some people
during that month I invited some people I knew and some people I didn’t know to
I knew and some people I didn’t know to
I knew and some people I didn’t know to join me me and Ron my friend for a day
join me me and Ron my friend for a day
join me me and Ron my friend for a day or two along the road and we had three
or two along the road and we had three
or two along the road and we had three rules for the trail no phones from 7:00
rules for the trail no phones from 7:00
rules for the trail no phones from 7:00 to 7:00 everything that he said on the
to 7:00 everything that he said on the
to 7:00 everything that he said on the trail stays on the trail very important
trail stays on the trail very important
trail stays on the trail very important rule and and then everybody introduces
rule and and then everybody introduces
rule and and then everybody introduces themselves with an embarrassing story
themselves with an embarrassing story
themselves with an embarrassing story and and I learned that telling
and and I learned that telling
and and I learned that telling embarrassing stories is the wonderful
embarrassing stories is the wonderful
embarrassing stories is the wonderful way to create trust so I’m going to
way to create trust so I’m going to
way to create trust so I’m going to recommend that you try it this evening
recommend that you try it this evening
recommend that you try it this evening and to get you started I’ll tell you one
and to get you started I’ll tell you one
and to get you started I’ll tell you one of my embarrassing stories well I had
of my embarrassing stories well I had
of my embarrassing stories well I had the month I it’s amazing you discover
the month I it’s amazing you discover
the month I it’s amazing you discover you have so many stories like they just
you have so many stories like they just
you have so many stories like they just keep on coming
keep on coming
keep on coming so so this particular story this was
so so this particular story this was
so so this particular story this was about about two years after I got
about about two years after I got
about about two years after I got injured and there was a woman in
injured and there was a woman in
injured and there was a woman in rehabilitation with me called CP and she
rehabilitation with me called CP and she
rehabilitation with me called CP and she decided that I needed to go on a date
decided that I needed to go on a date
decided that I needed to go on a date and she said that she had a friend that
and she said that she had a friend that
and she said that she had a friend that might be willing to date me okay great
might be willing to date me okay great
might be willing to date me okay great so and she took me to that date we met
so and she took me to that date we met
so and she took me to that date we met me CP and her friend we met somewhere on
me CP and her friend we met somewhere on
me CP and her friend we met somewhere on the beach to have ice cream we get ice
the beach to have ice cream we get ice
the beach to have ice cream we get ice cream
cream
cream we we set it around sunset and this
we we set it around sunset and this
we we set it around sunset and this woman for some reason asked me a
woman for some reason asked me a
woman for some reason asked me a question about hospital it’s it’s a good
question about hospital it’s it’s a good
question about hospital it’s it’s a good topic but she asked me a question about
topic but she asked me a question about
topic but she asked me a question about something about hospital I don’t know
something about hospital I don’t know
something about hospital I don’t know exactly what she asked but I went into a
exactly what she asked but I went into a
exactly what she asked but I went into a tirade about a nurse I hated and this
tirade about a nurse I hated and this
tirade about a nurse I hated and this was this was a terrible nurse it was it
was this was a terrible nurse it was it
was this was a terrible nurse it was it was just awful I hated everything about
was just awful I hated everything about
was just awful I hated everything about I would I would try to organize my day
I would I would try to organize my day
I would I would try to organize my day to avoid his shift I would try to get
to avoid his shift I would try to get
to avoid his shift I would try to get operate on Fridays if I knew that he was
operate on Fridays if I knew that he was
operate on Fridays if I knew that he was on shift on the week I hated that you
on shift on the week I hated that you
on shift on the week I hated that you can hear I hated
can hear I hated
can hear I hated that person with passion it was like my
that person with passion it was like my
that person with passion it was like my day was organized around escaping how
day was organized around escaping how
day was organized around escaping how evil he was anyway I didn’t talk about
evil he was anyway I didn’t talk about
evil he was anyway I didn’t talk about him for two years in office and she
him for two years in office and she
him for two years in office and she asked this pool and she asked me
asked this pool and she asked me
asked this pool and she asked me something and I just go I just go and go
something and I just go I just go and go
something and I just go I just go and go and go and I keep on this hate and anger
and go and I keep on this hate and anger
and go and I keep on this hate and anger and terrible terrible term and I keep on
and terrible terrible term and I keep on
and terrible terrible term and I keep on going I I think for 15 minutes 5th just
going I I think for 15 minutes 5th just
going I I think for 15 minutes 5th just go and go and go and go and they finish
go and go and go and go and they finish
go and go and go and go and they finish and I feel such relief like you know I
and I feel such relief like you know I
and I feel such relief like you know I really I didn’t talk him for a long time
really I didn’t talk him for a long time
really I didn’t talk him for a long time finally I get a chance just goes out and
finally I get a chance just goes out and
finally I get a chance just goes out and and she says and what’s-his-name
so I say his name and she stands up as
so I say his name and she stands up as you say it’s my father
and I’ve never seen her since so I’m not
and I’ve never seen her since so I’m not recommending all embarrassing stories
recommending all embarrassing stories
recommending all embarrassing stories but it’s a trust creating activity Trust
but it’s a trust creating activity Trust
but it’s a trust creating activity Trust is important try tonight and thank you
is important try tonight and thank you
is important try tonight and thank you very much
”
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