Nov 01

Game Theory and the Use of Social Media

I’m reading a book called The Origins of Virtue: Human Instincts and the Evolution of Cooperation by Matt Ridley. I found it on Trey Ratcliff’s book list, which is quite good and I recommend highly.

The book features a perfect study to point out when someone says “Why should I waste my time with Twitter or blogging?” In the study,

“Adam is given £100 and was told to share it with Bob. Adam must say how much he intends to give to Bob and, if Bob refuses the offer, neither will get anything at all. If Bob accepts, then he gets what Adam has offered. The logical thing for Adam to do, assuming he thinks Bob is also a rational fellow, is to offer Bob a derisory sum, say one pound, and keep the remaining £99. Bob should rationally accept this, because then he is £1 better off. If he refuses, he will get nothing.

But not only do very few people offer such a small sum when asked to act Adam’s part, even fewer accept such exiguous offers when playing Bob’s part. By far the commonest offer made by real Adams is £50. Like so many games in psychology, the purpose of the ultimatum bargaining game is to reveal how irrational we are and wonder at the fact. But Frank’s theory has little difficulty explaining this ‘irrationality’, ven finding it to be sensible. People care about fairness as well as self-interest. They do not expect to be offered such a derisory sum by someone in Adam’s position and they refuse it because irrational obstinacy is a good way of telling people so. Likewise, when playing Adam, they make a ‘fair’ offer of 50:50 to show how fair and trustworthy they are should future opportunities arise that depend on trust. Would you risk your good reputation with your friends for a lousy £50?”

Ridley continues by explaining this simple truth: when experimenters try the same exercise but each party suddenly becomes anonymous to each other, the person in the giving role more than often gives £1 to the other party.

Why is the simple acknowledgment of identity so important in fair dealings between two parties? Why are we so much more giving to those we know than we are to strangers?

Identity introduces the concept of accountability. Social media tools allow us to bring our identity and our networks’ identities to the forefront. Basically if you hose somebody, they can now call it out to your friends and followers, which they would not be able to do in the often anonymous world we used to live in.

So you can say you “don’t have time for social media”, but bear in mind that you may end up receiving £1 when you could be getting 50.

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