hard-to-forge currency, or runs her credit card through a third-party authentication system. Window bars and burglar alarms make it harder for Alice to steal from Bob.
Pressures that raise the consequences of defecting. These would be largely implemented after the fact; think prison terms, fines, cutting off a thief's hand, 9 and social ostracism. Even if they never catch anyone, the police can make it difficult and expensive to commit a crime; every heist movie demonstrates this entertainingly.
Pressures that reduce the actual or expected benefits of defecting. Exploding ink cartridges can make stolen garments less useful to thieves, and daily ATM withdrawal limits restrict how much a thief can steal.
Pressures that limit the damage caused by the defections that happen. Bob won't keep a lot of cash in his store. He might even store some of his expensive inventory elsewhere. He'll also have an insurance policy that will help him resume normal business quickly after a theft.
Pressures that increase the benefits of cooperating. Reputation serves this function; Alice derives value from being known in society as honest and honorable in her business dealings, more so if she is part of the same society as the merchant she patronizes. Certainly Alice's credit rating is a part of her reputation. We also have a powerful need to conform to the group.
Pressures that lower the costs of cooperating . Society makes it easy to cooperate. Stores make check-out stands easy to find. Unforgeable paper money and credit cards make it easy to conduct commerce, as opposed to a barter system, or needing to lug around a sackful of gold and silver. Or think of the iTunes store, which makes it easy to buy music legitimately online.
There's a lot of overlap here, and many of these techniques are tightly coupled. When you reduce the benefits of defecting, you almost certainly reduce the frequency of defecting.
Figure 6: Societal Pressure Knobs
Think back to the Hawk-Dove game, and the knobs society can use to set the initial parameters. The categories in that figure are all individual knobs, and societal pressures provide a mechanism for the group to control those knobs. In theory, if the knobs are calibrated perfectly, society will get the exact scope of defection it's willing to tolerate.
There are many ways to sort societal pressures. The system I'm using sorts them by origin: moral pressures, reputational pressures, institutional pressures, and security systems. 10 These are categories you've certainly felt yourself. We feel moral pressure to do the right thing or—at least—to not do the wrong thing. Reputational pressure is more commonly known as peer pressure, but I mean any incentives to cooperate that stem from other people. Institutional pressure is broader and more general: the group using rules to induce cooperation. Security systems comprise a weird hybrid: it's both a separate category, and it enhances the other three categories.
The most important difference among these four categories is the scale at which they operate.
Moral pressure works best in small groups . Yes, our morals can affect our interactions with strangers on the other side of the planet, but in general, they work best with people we know well.
Reputational pressure works well in small- and medium-sized groups . If we're not at least somewhat familiar with other people, we're not going to be able to know their reputations. And the better we know them, the more accurately we will know their reputations.
Institutional pressure works best in larger-sized groups . It often makes no sense in small groups; you're unlikely to call the police if your kid sister steals your bicycle, for example. It can scale to very large groups—even globally—but with difficulty.
Security systems can act as societal pressures at a variety of scales . They can be up close and personal, like a suit of armor. They can be global, like the systems to detect international money laundering. They
Pressures that raise the consequences of defecting. These would be largely implemented after the fact; think prison terms, fines, cutting off a thief's hand, 9 and social ostracism. Even if they never catch anyone, the police can make it difficult and expensive to commit a crime; every heist movie demonstrates this entertainingly.
Pressures that reduce the actual or expected benefits of defecting. Exploding ink cartridges can make stolen garments less useful to thieves, and daily ATM withdrawal limits restrict how much a thief can steal.
Pressures that limit the damage caused by the defections that happen. Bob won't keep a lot of cash in his store. He might even store some of his expensive inventory elsewhere. He'll also have an insurance policy that will help him resume normal business quickly after a theft.
Pressures that increase the benefits of cooperating. Reputation serves this function; Alice derives value from being known in society as honest and honorable in her business dealings, more so if she is part of the same society as the merchant she patronizes. Certainly Alice's credit rating is a part of her reputation. We also have a powerful need to conform to the group.
Pressures that lower the costs of cooperating . Society makes it easy to cooperate. Stores make check-out stands easy to find. Unforgeable paper money and credit cards make it easy to conduct commerce, as opposed to a barter system, or needing to lug around a sackful of gold and silver. Or think of the iTunes store, which makes it easy to buy music legitimately online.
There's a lot of overlap here, and many of these techniques are tightly coupled. When you reduce the benefits of defecting, you almost certainly reduce the frequency of defecting.
Figure 6: Societal Pressure Knobs
Think back to the Hawk-Dove game, and the knobs society can use to set the initial parameters. The categories in that figure are all individual knobs, and societal pressures provide a mechanism for the group to control those knobs. In theory, if the knobs are calibrated perfectly, society will get the exact scope of defection it's willing to tolerate.
There are many ways to sort societal pressures. The system I'm using sorts them by origin: moral pressures, reputational pressures, institutional pressures, and security systems. 10 These are categories you've certainly felt yourself. We feel moral pressure to do the right thing or—at least—to not do the wrong thing. Reputational pressure is more commonly known as peer pressure, but I mean any incentives to cooperate that stem from other people. Institutional pressure is broader and more general: the group using rules to induce cooperation. Security systems comprise a weird hybrid: it's both a separate category, and it enhances the other three categories.
The most important difference among these four categories is the scale at which they operate.
Moral pressure works best in small groups . Yes, our morals can affect our interactions with strangers on the other side of the planet, but in general, they work best with people we know well.
Reputational pressure works well in small- and medium-sized groups . If we're not at least somewhat familiar with other people, we're not going to be able to know their reputations. And the better we know them, the more accurately we will know their reputations.
Institutional pressure works best in larger-sized groups . It often makes no sense in small groups; you're unlikely to call the police if your kid sister steals your bicycle, for example. It can scale to very large groups—even globally—but with difficulty.
Security systems can act as societal pressures at a variety of scales . They can be up close and personal, like a suit of armor. They can be global, like the systems to detect international money laundering. They
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