What seems to matter more is a much more direct sense of guilt that goes in the opposite direction: the more the receiver believes the sender expected something in return, the more she returns money. In that world, there is no actual kindness. The religious equivalent would be people being nice in the hope of going to heaven. Is a good action still a good action if it has a purely selfish objective? The seemingly moral principle of guilt is just a very convenient preference that makes transactions like the Trust Game financially profitable for everyone. In the long term, people build a reputation, and being known as having a sense of guilt is a trait that will take you very far. If people can trust you, it is in their interest to work with you. In contrast, people who do not experience guilt are not interesting business partners, it may work once but over time no one will send them money without a cast iron contract. In Darwinian terms, it makes complete sense that the human species has evolved in a way that most people feel guilty not returning money. A NEW TWIST In a recent experiment with Jonathan HW Tan, of Nanyang Technological University in Singapore, we have taken the question one step further, trying to understand further the roots of betrayal, and what is so special about people having some shared history. We ran the original Trust Game alongside a slightly modified version. In the Trust Game, the sender takes a risk by sending money. In our game, we ask both subjects simultaneously to send or keep £10. If at least one chooses to keep, both get £10. If both send, one of them is picked at random and gets a chance to keep or share the £30. In our setting, even completely selfish people without any guilt aversion would choose to send money if they are not too risk averse, simply because they can expect to get the larger sum of £30 half of the time. But then, there is certainly no kindness involved, and no obvious reason to feel guilty. Yet, our subjects return a lot of money, and even more so than in the Trust Game. What we find is therefore that simply doing something together creates a sufficiently large sense of loyalty to encourage further cooperation We ran our experiment in a garment factory in Pakistan because our experiment is inspired by a form of credit widely used in that country, the Rotating, Saving and Credit Associations (ROSCA). In ROSCAs, people put their savings in common, and then take turns – sometimes at random – to realise small projects with the money. If one person decided to run away with the sum, it would be the end of the project for everyone. But people tend to cooperate and not to betray each other. In the end, not betraying is simply in the interest of everyone. FIFTY FOUR DEGREES | 29 Dr Renaud Foucart is a Senior Lecturer in the Department of Economics. The paper A test of loyalty, by Dr Renaud Foucart, of Lancaster University Management School; and Dr Jonathan HW Tan, of Nanyang Technological University in Singapore, is published in Theory and Decision. r.foucart@lancaster.ac.uk
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