A positive-sum game is a scenario in which agents have choices that can improve the lots of both of them at the same time. A classic positive-sum game is everyday life is the exchange of favors, where each person can confer a large benefit to another at a small cost to himself. Examples include primates who remove ticks from each others backs, hunters who share meat whenever one of them has felled an animal that is too big for him to consume on the spot, and parents who take turns in babysitting. A key insight of evolutionary psychology is that human cooperation and the social emotions that support it, such as sympathy, trust, gratitude, guilt, and anger, were selected because they allow people to flourish in positive-sum games. A classic positive-sum game in economic life is the trading of surpluses. If a farmer has mote wheat than he can eat, and a herder has more milk than he can drink, both of them come out ahead if they they trade some wheat for some milk. Of course, an exchange at a single moment in time only pays when there is division of labor. A fundamental insight of modern economics is that the key to the creation of wealth is a division of labor, in which specialists learn to produce a commodity with increased cost - effectiveness and have means to exchange their specialized products efficiently. Positive-sum games also change the incentives for violence. If youre trading favors or surpluses with someone, your trading partner suddenly becomes more valuable to you alive than dead. Though many intellectuals hold businesspeople in contempt for their selfishness and greed, in fact, a free market puts a premium on empathy.
Posted on: Fri, 15 Aug 2014 11:00:45 +0000
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