In the early 1970s, Robert Trivers pointed out that animals can benefit by being nice to one another if they interact often enough to build up trust. By keeping their promises and fulfilling their contracts, rather than opting for the short-term benefits of lying and cheating, they might obtain larger benefits over the longer term. Trivers's theory of "reciprocal altruism" suggested that many cases of apparent altruism are rationally selfish if viewed in their larger social context over the longer term. In reciprocity, there are three defining features: animals alternate giving and receiving benefits; each act has costs to the giver and benefits to the receiver; and giving is contingent on having received. As long as these three conditions hold, animals can trade benefits back and forth. Each act taken out of context may look altruistic, but the whole sequence is mutually beneficial. Trivers ingeniously showed how to connect the mathematics of reciprocity to the biology of altruism and the psychology of trust.

This logic of reciprocity was news to biologists, but not to economists. Trivers had rediscovered an economic principle called the "folk theorem of repeated games." It is called a folk theorem because it was discovered independently by so many different game theorists in the early 1950s that none has ended up with individual credit. The theorem says that repeated interactions can be as powerful as contract law in maintaining cooperation. Any mutual benefits that two individuals could agree to provide to each other through a formal contract can also be sustained if the individuals interact sufficiently often. This is why traditional Chinese-style business that builds trust through repeated interaction can work as well as American-style business based on contracts and litigation.

The folk theorem of repeated games clearly implied that cooperation depends on the threat of punishing cheaters who do not cooperate. With contracts, punishment implies litigation. With repeated interaction, punishment can consist of withdrawing from further interaction for a while, denying the cheat the benefits of cooperation. (If both individuals were not deriving benefits from cooperating, they would not be interacting at all.) For reciprocity to evolve according to the folk theorem, you do not need the concept of a contract, or the emotion of trust or betrayal, or a conceptual understanding of the future. All that is needed is a helpful behavior on your part if the other individual cooperated last time, a punishment routine you impose if he or she fails to cooperate, plus a capacity for telling the difference. Plants, flatworms, herring, and sloths could all evolve reciprocity if they evolved these three abilities.

The idea of reciprocal altruism promised to revolutionize the study of animal behavior. In the 1970s, biologists expected to find cooperation in thousands of species being sustained through repeated interactions. Unfortunately, three decades of intense research have produced almost no clear examples of reciprocity in animals other than primates. Evolution appears to avoid reciprocity whenever possible. The only decent non-primate example occurs in vampire bats. Biologist Gerald Wilkinson found that vampire bats that have drunk well on a particular night sometimes vomit surplus blood to hungry non-relatives. These non-relatives may vomit blood in return the next night, if they happen to have found a good vein. However, even in this often-cited case it is not clear whether generosity to particular individuals is truly contingent on their past behavior.

Social primates offer better examples of reciprocity. Primatologist Frans de Waal observed in his book Good Natured that chimps appear to show moral outrage if a long-term ally fails to support them in a fight. They seek out and attack the cowardly traitor. This looks like a punishment routine designed to sustain cooperation. De Waal also found good evidence of chimpanzees trading food for grooming in a truly contingent way. Higher levels of reciprocity in primates are not surprising, given that primates are good at recognizing individuals, forming social relationships with non-relatives, and giving one another social benefits such as grooming, food-sharing, and mutual defense.

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