Thursday, August 2, 2007

Trust, Trade and Fairness

In the magazine Scientific American Mind , an article asks the question "Is Greed Good?" It concludes "economists are finding that social concerns often trump selfishness in financial decision making, a view that helps to explain why tens of millions of people send money to strangers they find on the Internet."

Rather than reduce each and every transaction to a rational calculation of self-interest, humans appear culturally and genetically disposed to trust and trade, under some standard of fairness. You can sum up the results by saying human nature uses the rule "Trust someone until they give you a good reason not to. Then punish them accordingly."

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