Sunday, May 13, 2012

Evolution and Mismatches: Value Revisited

Experiments conducted on mice to study learning patterns of living organisms reveal that genetic inheritance plays a very important role in learning. In one such experiment, two mice, one male and one female are placed in a cage that has a door connecting it to a tunnel. Mice can use this tunnel to go to another compartment of the cage. A naked current carrying wire is placed at the door of the tunnel at a certain height such that mice get a slight electric shock if they touch the wire. Mice slowly learn to avoid the shocks by jumping over the wire without making contact. Time to adopt this behavior gets shorter from one generation to the next and after seven or eight generations the mice learn to jump over the wire almost by birth. Later generations jump over the wire even when it is not carrying any current. It seems like the object of the action is lost in this process. This is what this last generation would say to the world: “I think I have a natural inclination to jump over wires. Sometimes I wonder why but I guess it’s all about being a mouse”

99% of genes in humans and mice are similar. It is only the remaining 1 % that makes us humans. So it would not be a stretch to extrapolate this pattern to humans. It is two and a half billion years since eukaryotes first appeared on earth. Human evolution, according to the current consensus, started a little later about seven million years ago. What we see today as a human is the result of a chain of birth that never broke during this entire period. Your mother, your mother’s mother, your mother’s mother’s mother…..and so on leading up to the Eukaryote – no single organism in this chain died before giving birth. The chain never broke. During this process, human construct acquired and developed various properties and dispositions; to adapt, to survive and to proliferate. Reflex reactions to harmful stimuli such as excessive heat, pain as a signal for something to be avoided or taken care of etc. etc. Several notions or definitions were developed by humans specifically to capture and communicate these notions. These notions are related to how humans interact with their environment. For example, pressure waves of air are one of the primary means via which humans communicate and become aware of objects they don’t see. A notion of “sound” was developed in the human construct referring to these pressure waves.

However in the recent ten thousand years and even more so in the recent-most two hundred years of industrial revolution, the immediate environment of humans has undergone dramatic changes. These changes are radically different from the changes that the environment had undergone prior to this period. Human interactions now involve physical structures and rules that he has created himself. For example, reading this article you are at the same time looking at your computer screen, your table, walls of your room etc. All of these are human made straight line constructions. Straight line constructions are never found in nature. This new environment can affect our subconscious in ways we might never be able to fully comprehend. You can get an idea of the sensitivity of our body to environmental changes by the speed at which the chemical composition of bones of astronauts change within just a few days of exposure to microgravity.

A sudden change of environment can also lead humans to use their dispositions in ways that can have undesirable consequences. Following paragraphs explain this with a few examples.
Animal have very strong instincts that drive their behavior. One such instinct is of judging other animals, their prey, rival or predator, by their size. The primitive mind inside humans also respects size. For example, when you see Tom Cruise on a big movie screen, your thoughts in the subconscious are “I have not seen a man this big …he must be 20 ft tall…. I must follow what he become this big”. Technology provides the size and the preexisting human dispositions recognize it. This recognition process triggers a chain reaction. People start recognizing the big Tom Cruise and then recognition drives recognition. Imagine what image of Tom Cruise you would have had, if you could only watch the actor on screens the size of your wrist watch. You would then see the actor in the size of insects. Insects are mostly prey for vertebrates and commensurate will be your recognition.

Bigger animals are seen with respect and younger animals imitate them to become like them and in the process learn what made them big. Now consider how this disposition performs in the current environment. Big corporations use “recognized” people like Tom Cruise to promote their products. This marketing benefits from the preexisting human disposition of recognition, however in the process leaves a side effect. Imagine a twelve year old boy watching a masculine Hollywood actor enjoying a can of soda in a marketing campaign. The boy’s subconscious thoughts are - “This human is big… I must follow the big…to become big”. However, unlike in the animal world where younger animals get to see what the stronger animals do to become strong, the boy remains oblivious of the efforts of the actor that went into making of his muscles. Younger humans see media coverage of Bill Gate’s success and his riches. Media seldom covers the sleepless nights he spent and the risks he took in life. Welcome to the confusion induced concept of easy money. Economists’ view of utility and the dynamics that influence human behavior need to change in light of these mismatches.

Consider another example. It is observed that some adults suffer from nausea while traveling in cars or other vehicles. Researchers associate this to the mismatch between stationary visual signals humans get while looking at objects within a car which appear stationary and the acceleration/deceleration that their body experiences with the motion of the car. Similar confusion can emerge when humans start to interact with new technologies, especially at an early age where the building foundations are laid. Toddlers observe everything around them and learn to anticipate from the events they observe. When kids learn to catch a ball, their mind in subconscious learns to anticipate the effects of gravity. A child who watches cartoons all day observes, and in her/his subconscious interprets, objects and characters in the cartoon film. Characters in cartoon films defy all the laws of nature. Objects don’t follow laws of gravity. Objectives are achieved without hard work etc. etc. All this is registered in the child’s brain. The child’s brain can get confused when it tries to create a structure by interpreting what the child saw in the cartoon channel and what was observed in the real world. The mind would say – What is the effect of gravity? 9.8 m/sec2 of acceleration or the random motions in the cartoon? The confusion can have undesirable consequences on how the child perceives the world and his/her role in it.

Another example, a little less serious one, and perhaps not with undesirable consequences - When you think of Arnold Schwarzenegger in Terminator 2 – the first scene you recall might be one in slow motion. On the other hand when you think of Charlie Chaplin or a similar funny character – you might remember a fast forward scene. Why do humans use slow motion to emphasize strength and seriousness, and fast forward for something funny and trivial? Again, evolution might have the answer. Big animals move slowly. Elephants, rhinos, hippos, and lions. Even when they move fast you see the motion of their legs, and their motion on ground relative to their size. This relative perception registers their motion as “slow(er)”. This slow perception triggers respect, seriousness, fear and all those emotions these animals have gained over millions of years of evolution.

Now think of insects. Ever seen a cockroach scurry around? You think it is fast, don’t you? It is because you see not only its motion relative to its size but also the motion of its legs relative to one another (fast changing angles and rapidly closing gaps). You perceive these motions as non-serious and funny because you, I mean the primitive you, generally won’t fear for your life when you see an insect. I wonder if cockroaches knew this and moved in slow motion.

All these examples discussed above reveal mismatches. The economic concept of value and the actions that are taken to achieve it are a function of how the human mind, with its pre-existing dispositions, processes information. This process, as explained in the examples, is subject to mismatches that can have undesirable consequences. In light of these mismatches, the concept of value at least needs a revisit if not a major overhaul.

Tuesday, May 8, 2012

Game Changer

Watch the video above before reading the blog. If you are not able to watch it here, you can watch it using the link: 

I saw this video about two years ago and shared it on my personal blog. On the face of it, the story seems quite evident: After barking obscenities at each other from across the gate for so long, the two brave-hearts want to keep it the same way, even when there is nothing to stop them. However, an analysis suggests that this behavior might have roots in game theory.
Let us first look at the payoffs when there is a gate between the two players. Barking at each other gives satisfaction, so let this across-the-gate pleasure have a payoff of 2. If no one barks the payoff is 0. Being able to bark alone will give maximum satisfaction so let that payoff be 3. Being barked at, without a quid pro-quo, is tantamount to humiliation, and therefore has a negative payoff of -1. Clearly there is a nash equilibrium here, and our friends seem to know it.
Now let us look at the game without the gate. Absence of the gate changes the game entirely. Barking now can lead to an actual fight which might have extreme negative consequences for each of the two players. Let this negative payoff be -20. Let the payoff of a bark-off without a fight be 5. (Notice that this payoff is more than across-the-gate pleasure of barking which is 2). The expected payoff of barking when the gate is not between the players, with equal probabilities of either event, is therefore 0.5 X -20 + 0.5 X 5 = -7.5. And of course, there is nothing like barking alone with no gate in between. So that payoff will be very high; let it be 6. Likewise, being barked at, with no response and with no gate to blame on is utter humiliation. So, let the payoff be -4 in this case.

Now comes the tricky part. What is the payoff for circling around each other? The fact that the two players don’t bark at each other when there is no gate in between suggests two possibilities:

  1. If the payoff is greater than 6 then there is a Nash equilibrium where each player is better off not barking at each other.
  2. If the payoff is less than 6 then there is no Nash equilibrium, and it is difficult to ascertain why our friends kept quiet on all the three occasions.
What is it that is making them behave in this way: Nash equilibrium, disposition, or severity of the negative payoff? Perhaps, that is what the two brave-hearts are trying to figure out when they move in circles around each other. The white one at one point seems confused whether it is the same ‘enemy’ or some parallel universe across the gate, but let us leave that dimension for now.