What Price the Moral High Ground?: Ethical Dilemmas in Competitive Environments

Overview

"I loved this book. It makes sense of key economic behaviors not well explained by other models, through a combination of theory, examples, and clever experiments. Clearly written, it will be easily understood not only by economists but also noneconomists. Vintage Frank."--Shlomo Maital, author of Executive Economics

"Robert Frank takes us beyond the economic notion of rationality, pointing to the norms that guide people, their social status, and character, and make them seem nicer than economic theory would have...

See more details below
Other sellers (Paperback)
  • All (15) from $2.63   
  • New (7) from $7.98   
  • Used (8) from $2.63   
Sending request ...

Overview

"I loved this book. It makes sense of key economic behaviors not well explained by other models, through a combination of theory, examples, and clever experiments. Clearly written, it will be easily understood not only by economists but also noneconomists. Vintage Frank."--Shlomo Maital, author of Executive Economics

"Robert Frank takes us beyond the economic notion of rationality, pointing to the norms that guide people, their social status, and character, and make them seem nicer than economic theory would have them be. He adds an interesting twist to the story by showing that those who are subjected to theory may actually be less nice, less cooperative than others."--Arjo Klamer, editor of Conversations with Economists and The Value of Culture

Read More Show Less

Editorial Reviews

The Weekly Standard
What Price the Moral High Ground? Is wide-ranging and well-written.
— John J. DiIulio, Jr.
Boston Globe - Laura Secor
Moral behavior is not irrational . . . Frank insists. The challenge is to define self-interest in a manner capacious enough to accommodate the real motives for people's choices. Frank does this with a mixture of Darwinian science, psychology, and flexible common sense.
The Weekly Standard - John J. DiIulio
What Price the Moral High Ground? Is wide-ranging and well-written.
Business Economics - Merrill Matthews
[Frank's] vision is one that allows people to strive to meet their chosen goals and promotes the common good in an ordered cosmos—which is exactly where many of us want to live.
From the Publisher

"This book is short, accessible and thought-provoking. . . . Frank draws heavily from game theory and evolutionary biology to explain why do-gooders work for less and firms that don't squeeze suppliers and cheat customers profit over the long run."--Washington Post

"Moral behavior is not irrational . . . Frank insists. The challenge is to define self-interest in a manner capacious enough to accommodate the real motives for people's choices. Frank does this with a mixture of Darwinian science, psychology, and flexible common sense."--Laura Secor, Boston Globe

"What Price the Moral High Ground? Is wide-ranging and well-written."--John J. DiIulio, Jr., The Weekly Standard

"[Frank's] vision is one that allows people to strive to meet their chosen goals and promotes the common good in an ordered cosmos--which is exactly where many of us want to live."--Merrill Matthews, Business Economics

Washington Post
This book is short, accessible and thought-provoking. . . . Frank draws heavily from game theory and evolutionary biology to explain why do-gooders work for less and firms that don't squeeze suppliers and cheat customers profit over the long run.
Boston Globe
Moral behavior is not irrational . . . Frank insists. The challenge is to define self-interest in a manner capacious enough to accommodate the real motives for people's choices. Frank does this with a mixture of Darwinian science, psychology, and flexible common sense.
— Laura Secor
Business Economics
[Frank's] vision is one that allows people to strive to meet their chosen goals and promotes the common good in an ordered cosmos—which is exactly where many of us want to live.
— Merrill Matthews
Read More Show Less

Product Details

  • ISBN-13: 9780691146942
  • Publisher: Princeton University Press
  • Publication date: 4/4/2010
  • Pages: 224
  • Sales rank: 1,424,542
  • Product dimensions: 5.50 (w) x 8.40 (h) x 0.70 (d)

Meet the Author

Robert H. Frank is the Henrietta Johnson Louis Professor of Management and professor of economics at Cornell University, as well as an economics columnist for the "New York Times". His books include "The Winner-Take-All Society" (with Philip Cook), "What Price the Moral High Ground?, The Economic Naturalist," and "Principles of Economics" (with Ben Bernanke).

Read More Show Less

Read an Excerpt

What Price the Moral High Ground?

Ethical Dilemmas in Competitive Environments
By Robert H. Frank

Princeton University Press

Robert H. Frank
All right reserved.

ISBN: 0691006725


Chapter One

FORGING COMMITMENTS THAT SUSTAIN COOPERATION

RATIONAL CHOICE MODELS typically assume that people choose among possible actions so as to maximize the extent to which they achieve their goals. Such models yield few interesting predictions, however, without first introducing specific assumptions about the nature of those goals. How can we predict what someone will do unless we first have some idea of what he or she cares about?

The most frequent move at this step is to assume that people pursue goals that are self-interested in fairly narrow terms. Yet many common actions appear to be at odds with this assumption. We leave tips at out-of-town restaurants we will never visit again. We donate bone marrow in an effort to save the lives of perfect strangers. We find wallets and return them with the cash intact. We vote in presidential elections.

People uncomfortable with the self-interest assumption often respond to such contradictions by assuming a broader range of human objectives. Tips in out of town restaurants? We leave them because we care not only about our personal wealth, but also about holding up our end of an implicit understanding with the server. Voting in presidential elections? We do it because we care about fulfilling our civic duty. And so on.

The problem with this approach, however, is that if analysts are totally unconstrained in terms of the number of goals they can attribute to people, virtually any behavior can be "explained" after the fact simply by positing a taste for it. As students of the scientific method are quick to emphasize, a theory that can explain everything ends up explaining nothing at all. To be scientifically valuable, a theory must make predictions that are at least in principle capable of being falsified.

And hence the dilemma confronting proponents of rational choice theory: versions that assume narrow self-interest are clearly not descriptive, whereas those to which goals can be added without constraint lack real explanatory power. Yes, people seem to get a warm glow from giving to charity. But why does that give them a warm glow? Why don't they get a warm glow from not giving to charity, since they'll end up with more money for their own purposes that way, and since the absence of any individual's gift will make no perceptible difference?

Evolutionary psychology offers a principled way of resolving this dilemma. Instead of making essentially arbitrary assumptions about people's goals, it views our goals not as ends in themselves, but rather as means in our struggle to acquire the resources needed to survive and reproduce. At first glance it might appear that a Darwinian approach to the study of human motivation would be strongly biased toward a narrow view of self-interest. Certainly, best-selling titles such as The Selfish Gene and The Moral Animal have done little to dispel that view. Yet Darwinian analysis also suggests mechanisms that might support a considerably broader conception of human motivation. And because of its inherent bias in favor of self-interest, the Darwinian framework constitutes a conservative standard by which to judge whether a specific goal can be added to the analyst's list. Thus, according to this framework, a goal can be added only if a plausible account can be offered of why pursuit of that goal is consistent with survival under competitive conditions.

The specific idea I explore here has a distinctly paradoxical flavor. It is that people can often promote their own narrow ends more effectively by pursuing certain goals that are in clear conflict with self-interest. This idea is a special case of the broader notion that people can often improve their lot by making commitments that foreclose valuable options.

The most vivid illustration remains an early example offered by Thomas Schelling (1960), who described a kidnapper who suddenly gets cold feet. He wants to set his victim free, but is afraid the victim will go to the police. In return for his freedom, the victim gladly promises not to do so. The problem, however, is that both realize it will no longer be in the victim's interest to keep this promise once he is free. And so the kidnapper reluctantly concludes that he must kill the victim.

The kidnapper and his victim confront a commitment problem, and to solve it they need a commitment device, something that gives the victim an incentive to keep his promise. Schelling suggests the following way out (1960, 43-44): "If the victim has committed an act whose disclosure could lead to blackmail, he may confess it; if not, he might commit one in the presence of his captor, to create a bond that will ensure his silence." Keeping his promise will still be unpleasant for the victim once he is freed, but clearly less so than not being able to make a credible promise in the first place.

In Schelling's example, the blackmailable offense is an effective commitment device because it changes the victim's material incentives in the desired way. Is it also possible to solve commitment problems by means of less tangible changes in incentives? Can moral emotions, for example, function as commitment devices? And, if so, what evidence might persuade a skeptic that natural selection had favored such emotions at least in part for that reason? These questions are my focus in this chapter.

A first step in trying to answer them will be to adopt a common language. In what follows I will use the term "contractual commitments" to describe commitments facilitated by contracts (formal or informal) that alter material incentives. Schelling's parable is an example of contractual commitment. I will use the term "emotional commitments" to describe commitments facilitated by emotions.

TWO EXAMPLES

What kinds of problems are contractual commitments and emotional commitments meant to solve? I will discuss two illustrative examples. The first is a commitment problem typically solved by legal contracts, while the second is one for which such contracts are not quite up to the task.

Consider first the problem of searching for an apartment. You have just moved to a new city, and you need a place to live. If you are in Los Angeles or some other metropolis, you cannot possibly inspect each of the thousands of vacant apartments, so you check the listings and visit a few to get a rough idea of what is available-the range of prices, amenities, locations, and other features you care about. As your search proceeds, you find a unit that seems unusually attractive on the basis of your impressions of the relevant distributions. You want to close the deal. At that point, you know there is a better apartment out there somewhere, but your time is too valuable to justify looking further. You want to get on with your life.

Having made that decision, the next important step is to make a commitment with the owner of the apartment. You do not want to move in and then a month later be told to leave. After all, by then you will have bought curtains, hung your art, installed phone and cable service, and so on. If you are forced to leave, not only will those investments be for naught, but you will also have to begin searching anew for a place to live.

The landlord also has an interest in seeing you stay for an extended period, since he, too, went to a lot of trouble and expense to rent the apartment. He advertised it and showed it to dozens of other prospective tenants, none of whom seemed quite as stable and trustworthy as you seemed to be.

The upshot is that even though you know there is a better apartment out there, and even though your landlord knows that a better tenant will eventually come along, you both have a strong interest in committing yourselves to ignore such opportunities. The standard solution is to sign a formal lease-a contractual commitment that prevents each of you from accepting other offers that might later prove attractive. If you move out, you must still pay your rent for the duration of the lease. If your landlord asks you to leave, the lease empowers you to refuse.

The ability to commit by signing a lease raises the amount a tenant would be willing to pay for any given apartment, and reduces the amount that its owner would be willing to accept. Without the security provided by this contractual commitment, many valuable exchanges would not occur. Leases foreclose valuable options, to be sure. But that is exactly what the signatories want them to do.

The person searching for a mate confronts an essentially similar commitment problem. You want a mate, but not just any old mate. In the hope of meeting that special someone, you accept additional social invitations and make other efforts to expand your circle of friends. After dating for a while, you feel you know a fair amount about what kinds of people are out there-what sorts of dispositions they have, their ethical values, their attitudes toward children, their cultural and recreational interests, their social and professional skills, and so on. Among the people you meet, you are drawn to one in particular. Your luck holds, and that person feels the same way about you. You both want to move forward and start investing in your relationship. You want to get married, buy a house, have children. Few of these investments make sense, however, unless you both expect your relationship to continue for an extended period.

But what if something goes wrong? No matter what your mate's vision of the ideal partner may be, you know there's someone out there who comes closer to that ideal than you. What if that someone suddenly shows up? Or what if one of you falls seriously ill? Just as landlords and tenants can gain by committing themselves, partners in marriage have a similar interest in foreclosing future options.

The marriage contract is one way of attempting to achieve the desired commitment. On reflection, however, we see that a legal contract is not particularly well-suited for creating the kind of commitment both parties want in this situation. Even fiercely draconian legal sanctions can at most force people to remain with spouses they would prefer to leave. But marriage on those terms hardly serves the goals each partner had originally hoped to achieve.

A far more secure commitment results if the legal contract is reinforced by emotional bonds of affection. The plain fact is that many relationships are not threatened when a new potential partner who is kinder, wealthier, more charming, and better looking comes along. Someone who has become deeply emotionally attached to his or her spouse often does not want to pursue new opportunities, even ones that, in purely objective terms, might seem more promising.

That is not to say that emotional commitments are fail-safe. Who among us would not experience at least mild concern upon hearing that his wife was having dinner with Ralph Fiennes this evening, or that her husband was having a drink with Gwyneth Paltrow? Yet even imperfect emotional commitments free most couples from such concerns most of the time.

Again, the important point is that even though emotional commitments foreclose potentially valuable opportunities, they also confer important benefits. An emotional commitment to one's spouse is valuable in the coldly rational Darwinian cost-benefit calculus because it promotes investments that enhance reproductive fitness. But note the ironic twist. These commitments work best when they deflect people from thinking explicitly about their spousal relationships in cost-benefit terms. People who consciously approach those relationships with scorecards in hand are much less satisfied with their marriages than others; and when therapists try to get people to think in cost-benefit terms about their relationships, it often seems to backfire (Murstein, Cerreto, and MacDonald 1977). That may just not be the way we're meant to think about close personal relationships.

SUSTAINABLE COOPERATION

Solving commitment problems is important not only for successful pair bonding, but also for achieving a variety of other forms of cooperation. Indeed, the prisoner's dilemma-the ubiquitous metaphor for the difficulty of achieving cooperation among rational, self-interested individuals-is in essence a simple commitment problem. Both players in a prisoner's dilemma get higher payoffs when both cooperate than when both defect, yet no matter which choice one player makes, the other can get a still higher payoff by defecting. When each player defects, however, each receives a lower payoff than if both had cooperated, and hence the dilemma. Each player would be happy to join a mutual commitment to cooperate if he could. But when such commitments cannot be made, the dominant strategy is to defect.

The metaphor is a powerful one. It helps to explain the generally pessimistic tone of evolutionary biologists who have written on the subject of altruism and cooperation. Consider a population consisting of two distinct types of people, cooperators and defectors, who earn their living by interacting with one another in a game whose payoffs take the form of a prisoner's dilemma. When interacting with others, cooperators always cooperate and defectors always defect. Both types do best when they interact with cooperators. But if the two types looked exactly the same, they would interact with other individuals at random. And because defection is the dominant strategy in the prisoner's dilemma, defectors would always receive a higher expected payoff than cooperators in these random interactions. By virtue of their higher payoffs, defectors would eventually drive cooperators to extinction-and hence the standard result in behavioral biology that genuine cooperation or altruism cannot survive in competitive environments.

If the same individuals face a prisoner's dilemma repeatedly, cooperation can often be sustained, because individuals will have future opportunities to retaliate against those who defect in the current round (Rapoport and Chammah 1965; Trivers 1971; Axelrod and Hamilton 1981; and Axelrod 1984). But although cooperation motivated by threat of punishment is surely better than none at all, such behavior does not really capture what we mean by genuine cooperation. When cooperative play is favored by ordinary material incentives, as when interactions are repeated, it is more aptly called prudence than cooperation.

Writers in the standard tradition seem to agree that universal defection is the expected outcome in prisoner's dilemmas that are not repeated. Yet examples abound in which people cooperate in one-shot prisoner's dilemmas. Waiters usually provide good service in restaurants located on interstate highways, and diners in those restaurants usually leave the expected tip at meal's end, even though both realize they are unlikely ever to see each other again. People return wallets they find on street corners, often anonymously, and usually with the cash intact.

Continues...


Excerpted from What Price the Moral High Ground? by Robert H. Frank Excerpted by permission.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

Read More Show Less

Table of Contents


Introduction: Infectious Good vii
Part I. DOING WELL
1. Forging Commitments That Sustain Cooperation 3
2. Can Cooperators Find One Another? 28
3. Adaptive Rationality and the Moral Emotions 45
4. Can Socially Responsible Firms Survive in Competitive Environments? 58
Part II. DOING GOOD
5. What Price the Moral High Ground? 71
6. Local Status, Fairness, and Wage Compression Revisited 92
7. Motivation, Cognition, and Charitable Giving 109 Part III. FORGING BETTER OUTCOMES
8. Social Norms as Positional Arms-Control Agreements 133
9. Does Studying Economics Inhibit Cooperation? 155
Appendix: Ethics Questionnaire 179
Epilogue: The Importance of Sanctions 183
References 191
Index 199
Read More Show Less

Customer Reviews

Be the first to write a review
( 0 )
Rating Distribution

5 Star

(0)

4 Star

(0)

3 Star

(0)

2 Star

(0)

1 Star

(0)

Your Rating:

Your Name: Create a Pen Name or

Barnes & Noble.com Review Rules

Our reader reviews allow you to share your comments on titles you liked, or didn't, with others. By submitting an online review, you are representing to Barnes & Noble.com that all information contained in your review is original and accurate in all respects, and that the submission of such content by you and the posting of such content by Barnes & Noble.com does not and will not violate the rights of any third party. Please follow the rules below to help ensure that your review can be posted.

Reviews by Our Customers Under the Age of 13

We highly value and respect everyone's opinion concerning the titles we offer. However, we cannot allow persons under the age of 13 to have accounts at BN.com or to post customer reviews. Please see our Terms of Use for more details.

What to exclude from your review:

Please do not write about reviews, commentary, or information posted on the product page. If you see any errors in the information on the product page, please send us an email.

Reviews should not contain any of the following:

  • - HTML tags, profanity, obscenities, vulgarities, or comments that defame anyone
  • - Time-sensitive information such as tour dates, signings, lectures, etc.
  • - Single-word reviews. Other people will read your review to discover why you liked or didn't like the title. Be descriptive.
  • - Comments focusing on the author or that may ruin the ending for others
  • - Phone numbers, addresses, URLs
  • - Pricing and availability information or alternative ordering information
  • - Advertisements or commercial solicitation

Reminder:

  • - By submitting a review, you grant to Barnes & Noble.com and its sublicensees the royalty-free, perpetual, irrevocable right and license to use the review in accordance with the Barnes & Noble.com Terms of Use.
  • - Barnes & Noble.com reserves the right not to post any review -- particularly those that do not follow the terms and conditions of these Rules. Barnes & Noble.com also reserves the right to remove any review at any time without notice.
  • - See Terms of Use for other conditions and disclaimers.
Search for Products You'd Like to Recommend

Recommend other products that relate to your review. Just search for them below and share!

Create a Pen Name

Your Pen Name is your unique identity on BN.com. It will appear on the reviews you write and other website activities. Your Pen Name cannot be edited, changed or deleted once submitted.

 
Your Pen Name can be any combination of alphanumeric characters (plus - and _), and must be at least two characters long.

Continue Anonymously
Sort by: Showing 1 Customer Reviews
  • Anonymous

    Posted May 18, 2004

    Highly Recommended!

    Why are prison stripes the new fashion trend sweeping the ranks of executives caught pulling cheap tricks on Wall Street? Read Robert H. Frank's book to find out, although it is probably too theoretical to have an immediate influence on business practices. Frank offers a timely, penetrating critique of the contemporary social science notion that rational people always act out of self interest, without charitable or moral inclination. Frank shows why this dangerously simple-minded approach to human nature threatens to diminish further the moral standards of the West, which are already about as ugly as that frog you dissected in high school biology. Be forewarned, this is a philosophical presentation. It is not a practical volume filled with profit making, cheerful case studies. If that's what you're looking for, just drop the cover price into your legal defense fund. In hopes that Frank's ethical treatise will have a strong influence over time, we highly recommend it to those seeking a strong theoretical basis for simply doing the right thing.

    Was this review helpful? Yes  No   Report this review
Sort by: Showing 1 Customer Reviews

If you find inappropriate content, please report it to Barnes & Noble
Why is this product inappropriate?
Comments (optional)