Institutional Success with Common-Pool Resources

Is Empathy the Key?

Gary LynneContemporary Collaborators:Natalia Czap, Economist, UMDHans Czap, Economist, UMD

Mark Burbach, Geoscientist, Humanist, UNLWilliam Hayes, Philosopher, Entrepreneur,

BC/Thailand

Alternative Economic Framework, Theory and Model

Metaeconomics Framework (MEF): “The Me Needs a We to be, but without a Me there is no We” (makes Ethics, the Moral Dimension…the We… explicit in the framework)

Dual Interest Theory (DIT): I&We, Self&Other(shared)-interest, Ego ‘n’ Empathy

Dual Motive Model (DMM): Egoistic-hedonistic and empathy-sympathy based motives, joint and non-separable

Go Beyond and Transcend NCE

“…neoclassical economics is …subject of constant criticisms from within and from without…. Notion that one might somehow abandon it, in favor of one or another alternative, founders on the enormity of the prospective cognitive loss… had better accept, therefore, that for now and the forseeable future, neoclassical economics is the core of the subject. Instead of looking for an alternative theory to replace it, we should try to imagine an economic theory that might transcend its limitations.” (Leijonhufvud, 2004, p. 5)

Econ 101

0Ro

Social goods (e)

Private goods (d)

G

B

A

C

IG1

Ro

IG2

IG3

Super G: Extreme greed is extremely good

Balanced towardself-interestonly

Other (shared)interest of little to noconcern

Balance tipped

Egoistic-hedonisticrational self-interest

“Pushpins and Poetry”

Econ 101 Single-minded egoistic-hedonistic

utilitarian (perhaps the male head of household, at least* historically?)

Strict Father discipline: Complete self-control, disciplined always

Extreme greed is extremely good: Vertical axis is optimal path (Scrooge!)

Even if a social good e (poetry) is recognized it is a simple tradeoff with private good d (pushpins)

Econ 101 Completely cognitive, rational choice: No

role for emotions and feelings (solid path 0G)

No role for habit coming out of the subconscious

No acknowledged role for the social dimension, unity with causes like sustainability, etc.

Amoral (albeit a “moral order” of the Strict Father is presumed; ethical system hidden in the “invisible hand” of the market)

Ordinal utility

Homo Economicus is Evolving (Thaler, 2000)

Will begin losing IQ Will become a slower learner Will become more heterogeneous Will become more focused on

understanding cognition Will distinguish normative and descriptive

theories Will become more emotional We would add: Will become more

empathetic (see Rifkin, 2009; DeWaal, 2009; Singer, 2009; Sheeder and Lynne, 2011)

N e o c o r t e x N e o m a m m a l i a n C o m p l e x ( b a l a n c i n g )

P a l e o m a m m a l i a n C o m p l e x ( e m p a t h y )

P r o t o -R e p t i l l i a nC o m p l e x

( e g o )

T r i u n e B r a i nS t r u c t u r e

( C o r y , 1 9 9 9 , p . 1 0 )

Triune Brain Suggests Metaeconomics Framework (MEF)

On empathy, see: Singer, T. “Understanding Others: Brain Mechanisms of Theory of Mind and Empathy.” In: Glimcher, P.W., Camerer, C.F., Fehr, E. and Poldrack, R.A (Eds.). Neuroeconomics: Decision Making and the Brain. New York, NY: Elsevier, 2009.

Self-PreservationProgram

AffectionalProgram

EMPATHYOther-Interest

EGOSelf-Interest

EXECUTIVEPROGRAM

ConflictSystemsModel(Cory,1999, p.33)

Balancing!!

Self-Emotions: Fear, anger, hedonistic

(“pushpins”)

Social-Emotions: Compassion, shame, awe, in sympathy with

(“poetry”)

Broadens notion of “rational choice” to include empathy, self-control, integrationand balance

System 1

System 2

Self-interest Other(shared)-interest

Ego ‘n’ Empathy: ValueRational Choice (two interests)

Self-Control (Engagement)

Cognition (Intelligence)

Conscious

Affectivehedonism, “it feels good,” e.g.take more water from the common-pool, maximize profit and utility

Affective“in sympathy with” e.g. share the water in the common-pool, act on the basis of how you would wish to be treated, a bit of self-sacrifice

Automatic(subconscious, feelings, twoemotional tendencies)

Neural Functioning in Metaeconomics Framework (MEF)

Egocentric Empathetic

System 2

System 1

Metaecon 101Dual Interest Theory (DIT)

Z

0Ro

Social goods (e)

Private goods (d)

G

M

B

A

C

IG1

IM3

Ro

IM1IM2

IG2

IG3

Egoistic-hedonisticpath 0G of rationalself-interest

Empathetic-sympathetic path 0M of rationalother (shared)-interest

Rational own-interest: Integration, balance and synergy on a rational (including self-control) path 0Z of own(internalized dual)-interests (notice the bit of self-sacrifice in both domains...)

Metaecon has Empathy, and Self-control, at the Core of Economic Framing

Striking a balance:

Restrain/temper self-interest

Incommensurability (and Synergy)

Ro

B'

Ro

Oriented to other(shared)-interest IM

Oriented to self-interest IG

0

Z

A

B

C

R'

R'

Roo

Roo

Maximizeself-interest

Maximizeother(shared)-interest

Achieve satisfactoryown -interest: Empathy conditioned economic behavior and choice

Synergy on the own-interest path with self-sacrifice, altruism in both domains of interest

I1

I2

I3

Metapreferences:“choices without prices withoutapologies” (after Vatnand Bromley, 1994); seeSheeder and Lynne, 2011)

Paradox: Self-sacrifice leads to the potential for “sum-greater-than-sum-of-the-parts” outcomes*

DIT as “Old” Theory “Researchers await a new theorist

who will assimilate the old theories and present an integrated theory incorporating previous concepts and propositions. A cynical colleague of mine once said that such a task requires the services of someone in marketing because the ideas will not be new ones but merely old ones presented in new packaging.” (Lester, 1995, p. 161)

Metaecon 101

Dual minded pragmatist, doing best they can on path 0Z, satisficing not maximizing, representing pursuit of rational own-interest

Rationally (with effort put into self-control, most of the time) integrating and balancing Strict Father (0G) with Nurturant Parent (0M) on path 0Z

Rational choice influenced by the emotions (often running on automatic, dotted paths 0G and 0M)

Habits at work: Keep doing what works until “irritated” into cognitive consideration; we then evolve new “sufficient reasons” (Bromley, 2006) on new path 0Z

Metaecon 101

Choice characterized by a bit of self-sacrifice (altruism) in both domains of interest.

Not always fully in control (self-control waxes and wanes) as we move around between paths 0G and 0M (egoistic-hedonistic pleasure v. empathetic-sympathetic tempered choices)

Irrational outside of paths 0G and 0M

Metaecon 101 Broadened notion of what we mean

by rational choice, now including a key role for the emotions, a bounded rationality within the paths 0G and 0M

Cognitive and emotional processes come together on path 0Z

Cardinal utility, “back to Bentham” as in Kahneman et al (1997)

Two qualitatively different, likely incommensurable utilities at work

MEF and IAD Framework

Biophysical Conditions

Attributes of Community

Rules-in-Use

Action Situations Interactions

Outcomes

EvaluativeCriteria

External Variables

MEF

DIT gives “evaluative criteria”:Empathy tempering and restraining self-interest onpath 0G

DMM

Number of Studies Going Back to 1980s

Both institutional and behavioral (recycling and conservation) papers

See Curriculum Vitae at http://agecon-cpanel.unl.edu/lynne/resume/cvlynne.pdf

Looking herein at most recent USDOE and USDA projects

All point to a potential role for empathy-sympathy in tempering and restraining self-interest

CARBON SEQUESTRATION AND GLOBAL CLIMATE CHANGE

U.S. Department of Energy

Sautter et al (2011): Conservation Tillage (CT)

Independent Variables  Model 1 Model 2

Constant -3.552a -4.026a

Self-interest * Empathy/Others .299b  

Self-interest * Empathy/Ethics   .464a

Self-interest * Control -.331c -.560a

Farm size 1.006a 1.046a

Dummy for Habit (increase in CT) .619b .629b

Dummy for Habit (decrease in CT) -1.351b -1.397b

% correctly predicted for unselected cases*    

CT=1 92.3 89.2

CT=0 45.9 49.2

overall 77.5 76.4

-2 Log likelihood 389.3 375.4

Nagelkerke R-sq .382 .415

Chi-sq. (Hosmer and Lemeshow test) 10.3 10.6

a – p < 0.01; b – p < 0.05; c – p < 0.1

Empathytempering,restrainingself-interest

Evolution of DIT

By the time of this paper, have taken solid steps away from the egoism-altruism version of DIT (see Lynne, 1999, 2006a,b) toward the egoism-empathy (and sympathy) notion

Working on refining the “in sympathy with” notion… connecting it with the idea of a shared ethic, after Solomon (2007) (see cite in the Sautter et al. paper).

Solidly connected the empathy-sympathy domain to the moral dimension, the ethical domain… an ethic arising, first, from empathy, and second, from sympathy (or not) , in temporal sequence

Started experimental research on the role of empathy

Experiments are contextualized Market for carbon offsets: contributions to global

public goods (no local benefits as in the traditional PGG)

Downstream water pollution: 3-player dictator game with emotional feedback

Upstream-downstream property rights: Coase (property rights)-type game with emotional feedback or monetary punishment

Framing plays a crucial role Self-interest (Ego) frame (emphasis on profit) Empathy frame (Other-interest, walking-in-the-

shoes-of-others)

Market for Carbon Offsets

Ovchinnikova et al. 2009 (JSE)

Induced empathyplays substantiverole in selling offsets

Market for carbon offsets Cont’d

Comparing an experiment with and without reflections on one’s decisions

Pecuniary incentives (price difference) matters much less (Model 1H&1I) if one is asked to reflect on the consequences of her/his

decisions (as compared to when one is not asked – Model 2H&2I)

TARGETING WATERSHED VULNERABILITY AND BEHAVIORS LEADING TO ADOPTION OF CONSERVATION MANAGEMENT PRACTICES

USDA Grant, 2006-2010

Survey Research: Sheeder and Lynne (2011)

Two elaborations, developments in DIT: Being “in sympathy with” now viewed as the

basis for an ethic, the moral dimension, explicitly considered part of MEF, the key aspect of the other-interest in DIT

Framing self-interest as more primal, yet conditioned and tempered by the “other virtues” reflected in the other (shared, but internalized within own-self)-interest

Still about “own-interest” , not the interests of others, not other-regarding, but rather still only ownself-regarding (but now in two domains within the own-interest)

TABLE 2 LOGISTIC ESTIMATION OF NO-TILL ADOPTION DECISION (EMPATHY OTHER-INTEREST PROXY)

Variable Role of Capital

Adding Tempered Self

Adding Habitual Tendency

Adding Selfism Reinforced Control

Constant 1.005 -0.730 -1.823c -1.078 Income 0.006a 0.005a 0.004a 0.004a Slope -0.033 0.016 0.038 0.008 Selfism X Empathy

0.070a 0.066a 0.090a

Habit

0.383a 0.371a Selfism X Farm Control

-0.089a

Selfism X Other Control

0.013 Selfism X Nature Control

0.002

-2 Log Likelihood 442.134 422.482 384.954 374.016

χ2 (Block) 31.474a 19.651a 37.529a 10.938b χ2 (Model) 31.474a 51.125a 88.653a 99.592a

Nagelkerke R2 .100 .159 .266 .295

Percentage Correct: 0 0 2.2 23.1 28.6

1 100 99.8 96.8 95.8 Overall 81.7 81.9 83.3 83.5

Df 2 3 4 7

Note: a p<.01, b p<.02, c p<.05

Upstream-Downstream Common-Pool (Pollution) Problem

Empathy expressed re: downstream users

TABLE 3 LOGISTIC ESTIMATION OF NO-TILL ADOPTION DECISION (SYMPATHY OTHER-INTEREST PROXY)

Variable Role of Capital

Adding Tempered Self

Adding Habitual Tendency

Adding Selfism Reinforced Control

Constant 1.005 0.122 -1.157 -0.787 Income 0.006a 0.006a 0.004a 0.004a Slope -0.033 -0.012 0.004 -0.022 Selfism X Sympathy

0.037b 0.041b 0.043c

Habit

0.401a 0.391a Selfism X Farm Control

-0.082a

Selfism X Others Control

0.035 Selfism X Nature Control

0.017

-2 Log Likelihood 442.134 435.479 393.881 384.343

χ2 (Block) 31.474a 6.655b 41.598a 9.538c χ2 (Model) 31.474a 38.129a 79.727a 89.624a

Nagelkerke R2 .100 .120 .241 .267

Percentage Correct: 0 0 0 16.5 22.0

1 100 100 96.1 96.8 Overall 81.7 81.7 81.5 83.1

Df 2 3 4 7

Note: a p<.01, b p<.02, c p<.05

Sympathy with downstream users

Experimental Lab: On Downstream Water Users

Collected data from 216 laboratory participants during period July 12-18, 2010

General result: 216 profit maximizers would have earned $9288… while we paid out only $6200… they “took” substantively less than the maximum, and shared at something approaching a 50:50 ratio…suggests, generally, that empathy-sympathy at work!!

Upstream Farmer Upstream Farmer/Downstream Water User0

50

100

150

200

250

Empathy framing Self-interest framing Neutral framing

Acres CT

For UF, “nudging” empathy-sympathy matters; nudging egoistic-hedonistic tendencies not significantly different from neutral: Egoistic-hedonistic self-interest more primal? UF/DWU already internalizing it

Downstream water pollution

Czap et a. 2012 and Czap et al. 2013

UF/DWU already faced higher stakes in downstream water quality: Internally nudge their own environmental consciousness by a magnitude comparable to empathetic nudge for UF

Downstream water pollution Cont’d

  SEM MEM

Intercept 502.7*** -40.5

-72.5***  

  0.43***

EMPATHY FRAMING (1=Yes, 0=No)   118.1**

SELF-INTEREST FRAMING (1=Yes,

0=No)  -53.0

     

Nagelkerke R_sq. 0.28 0.50Significance: *** - p<0.01; ** - p<0.05; * - p<0.1. Adding empathy significantly increases the explanatory power

Example of an emotional feedback (communication) screen in EMPATHY

FRAME.

Costs /sacrificeto empathize/sympathize

Expression of positive and negative emotions

EmpathySelf-interest

Neutral

0

10

20

30

40

50

60

25.0

7.1

25.0

39.3

60.7

31.3

% of subjects

 Variable /Intercept  -2.80**/

1.58*

Cleanliness  5.46**/

-7.17***

Empathy FR -0.79 /

1.33

Self-intrst FR -1.53 /

1.22   

Nagelkerke

Rsq.

0.50 Emotional punishments and rewards during the play of the game are based on the more immediate payoff-relevant information (such as lake cleanliness), rather than framing or priming at the start of the game.

CENTER FOR AGRICULTURAL AND FOOD INDUSTRIAL ORGANIZATION – POLICY RESEARCH GROUP (CAFIO-PRG)

USDA Grant, 2012-2014

Property Rights Activity

PRO PRNO

Performance

PRO PRNOPRO:Initial Allocation

PRO: Transfer

PRNO: Feedback?

Quiz on Instructio

ns

Quiz on Instruction

s

Top 50% Bottom 50%

Structure of the Coasian ExperimentPre-game: Role determination

Role assignment

Game decisions: 2 rounds

CAFIO – Policy Research Group

Experimental Treatments: 2X3 matrix design

6 treatments 2 property rights assignments

Upstream Farmer is a PRO Downstream Water User is a PRO

3 feedback conditions No feedback (control) Monetary punishment (fine) Induced empathy-sympathy (frowney

emoticon)

CAFIO – Policy Research Group

Upstream-downstream property rights (work in progress)

InducingEmpathy ImposingFine No Feedback

-120

-80

-40

0

40

80

120

Change in PRNO's payoff after feedback

Treatment

Change in payoff, tokens Imposing a

monetary fine is detrimental to the payoff of Non-Owner of Property Rights, while emotional feedback leads to an increase of the payoff.

Upstream-downstream property rights (in progress)

More skewed to ownself if UF is PRO: Historical Norm?

InducingEmpathy ImposingFine No Feedback0

10203040506070 66.4 62.8 64.7

56.0 51.8 52.5

Upstream Farmer is PRODownstream Water User is PRO

Share of Payoff, %

Note: “Head-enders” at either end*

Bottomline: What have we learned from both survey and experimental research?

Empathy-sympathy plays a significant and substantive role when it comes to environmental decisions

Reflecting, walking-in-the-shoes-of-others decreases the importance of the pecuniary incentives (as it leads to tempering, restraining self-interest, if individuals choose to enter “into sympathy with” the shared cause)

Appealing to empathetic-sympathetic considerations leads to more balanced (more equal) distributions than when monetary incentives are used alone

Implications for Conservation Policy and Institutional Design

Empirical results from past 2-decades of empathy (and sympathy) studies confirm the Bromley (2006) contention that we need to move beyond welfare economics based policy and institutional design

Empirical results suggest that policy developers and institutional designers, as well as program facilitators, need to “nudge” empathy-sympathy on the part of everyone affected by and engaged in the use and management of the common-pool resource

EMPATHY (AND SYMPATHY) BASED COMMUNICATION LEADING TO COMMON-POOL SUSTAINABILITY (SUCCESS)?

Connecting with IAD Related Research

Ostrom (2009)

Communication is key variable Communicate face-to-face, or by any and all

other means, could find good outcomes Enough communication to design own*

sanctioning system, works even better

Predictions of noncooperative game theory work only without communication (and then only roughly so)

Ahn and Ostrom (2010)

Communication (whether in small or large groups) is “an important factor in facilitating cooperation” (p. 1585)

Especially important, however, in the small group from round 4 to round 5, got much closer to the best outcome in second round than did the large group

Results substantiate the finding that “face-to-face communication plays a major role in allowing groups to find cooperative solutions in social dilemma settings”

Future work: Empathy and Communication

Ho: Communication works because it facilitates the expression of empathy and evolution of sympathy Empathize first, which induces communication: Walk-in-

shoes-of-other common-pool resource users stirs one to engage the other person(s), works better within smaller, known groups

Sympathize with (or not) second, following from the communication, the interaction

In the case of successes, individuals have, as a result of said communication, 1) joined in sympathy with (e.g. formed a shared ethic of sustainability) shared cause, and, then, 2) work* to temper and otherwise restrain their self-interest behavior accordingly

Janssen et al. (2011) Stationary bandits* were randomly assigned in these

experiments Inequality of access hinders cooperation (not precluding it,

but hindering it) Upstreamers “need to restrain** themselves” (p. 1597) This need to restrain the self-interest only tendency is

independent of several contextual variables, including: Expertise of the participants Real-time computer game v. paper and pencil experiment Anonymous student groups v. known community members No communication v. text chat Framing of the experiment

Suggests research needed on “subtle contextual variables” that may have a stronger*** effect

Future Work: Empathy (and Sympathy) as a Subtle Contextual Variable

Ho: Successful common-pool institutions facilitate expressions of empathy and evolution of sympathy with the shared cause of sustaining the resource

Ho: Empathy is especially important in the situation where the stakeholders have different/asymmetric roles (such as upstreamers and downstreamers) rather than symmetric roles (fishermen or irrigators)

Anderies et al. (2011) Institutional responses made on

theoretical* basis found inadequate Theoretical representations have typically

been too simple and context** independent

Experiments have explored context and micro-situational variables: Found that homo economicus appears in only

a “very narrow range of conditions and for a small proportion*** of the population”

Generally, individuals pursue a wider range**** of aims than just profit maximization*****

Future work: Empathy-Sympathy Leading to Wider Aims

Ho: Individuals pursue dual, joint, nonseparable, and incommensurable motives, “push-pins AND poetry”, “profit from the common-pool AND sustainability of that common-pool”

Ho: Bit of self-sacrifice (with potential of synergy) at work in a common-pool choice, not about max U (at least not max self-interest U), homo-satisficus

Janssen and Rollins (2012)

Tend to find lower levels of cooperation* in asymmetric social dilemmas (p. 221)

Tend to (in asymmetric dilemmas) to contribute in proportion* to their endowments, while in common-pools, they tend to equalize earnings

Speculate: Historically, individuals faced less complex dilemmas, giving them time and experience to evolve*** norms, which served to help them in dealing with more complex dilemmas like common-pool allocations in irrigation situations

Ho: Higher levels of cooperation will generally be found in symmetric as compared to asymmetric cases due to it being far easier to empathize-sympathize

Ho: Active, conscious attempts at institutional design to stir empathy and to facilitate sympathy is paramount in the asymmetric case, while the “invisible hand” of empathy-sympathy is more likely to evolve in the symmetric case

Contact Information

Website: http://agecon.unl.edu/lynne/

Metaeconomics website: http://agecon.unl.edu/web/agecon/metaeconomics

On-line Course: Ecological Economics 883 (July 8 – Sept. 13, 10-weeks, 3-semester credits) http://agecon-cpanel.unl.edu/lynne/ecolecon/ecoleconsyllabus.htm

This presentation: http://agecon-cpanel.unl.edu/lynne/ecolecon/Lynne2013InstitutionalEmpathyCSIDPresent.pdf