How do you teach a Canadian to be rational?

Actually, this blog posting's title isn’t the first line of a joke (apologies to any Canadians out there already reaching for their poison pens). Rather, it’s a reference to an interesting lecture delivered by Thomas C. Schelling, a recent winner of the Nobel Prize in Economics, and transmitted on Ontario TV (OTV)’s “Big Ideas” program.

Schelling is less a man than an institution in the domain of rational choice theory. And, unlike a lot of theorists, he’s had extensive experience over his long life in many fields including government, industry and in making government policy. He’s also written many books, but the one that’s perhaps influenced me the most is “Micromotives and Macrobehavior”, which I’d recommend as background to anyone interested in understanding obstacles to making individual and collective decisions.

“Micromotives and Macrobehaviour” can be involved in places, so an easier way to become familiar with rational choice theory is to listen to Schelling's TVO audio talk (see reference below).

In his talk, Schelling pointed out that while people act rationally much of the time (or at least think they do) it’s worth looking at situations in which they’re not rational, and to explore why. To illustrate the value of this, Schelling used the analogy of the magnetic compass: in most contexts it’s an excellent navigational tool because it always points to magnetic north. But if you’re close to the North Pole it’ll point southeast, which is something that’s important to know. If you don’t it could lead to mishap.

Schelling also observed that social arrangements are sometimes good for helping to “do the right thing” – that is, benefiting us in the long run. Years before, as a new analyst at the RAND Corporation in Santa Monica, Schelling said he was puzzled by the fact that lunchtime joggers there always ran in packs of several people. It turned out that people quit after a while if they jog alone. Undertaking something in cooperation with other people, then, can sometimes help us be rational utility maximizers.

Schelling’s talk was about lots of other things besides, outlining several different ways in which apparently rational people can make irrational decisions. But his jogging story got me wondering about what happens when the group of joggers grows too big. When going running at lunchtime with some friends there’s usually a bit of positive peer pressure to turn up, and some healthy competition to keep running even when stitch or apathy set in.

Make the group too large, though, and one would expect to see increasing free rider behaviour. Who’s really going to notice whether you turn up if you’re only going to be one runner in 30, or one in 100? Why encourage and pace others if you think you’ll look better by racing ahead? Indeed, why run those hard yards at all if you don’t feel under much pressure among a group of near-strangers? Far from being good for “doing the right thing”, large-scale social arrangements might even encourage the opposite.

These sorts of concerns emerge in international relations too (something about which Schelling is, of course, well aware). Arrangements like political institutions, treaties and coalitions are sometimes good at enabling actors to maximize their rational interests, assuming that they have identified those interests. But they aren’t always if they grow too large – a dilemma that emerges in the context of NATO, for instance, or the European Union or Conference on Disarmament.

Care needs to be taken that multilateral arrangements help rather than hinder the identification and pursuit of interests collectively that might just be too hard to do alone. Smaller-scale arrangements in which those involved can spur each other on may sometimes achieve better results than the anonymous crowd of the marathon. It’s both an opportunity and a risk that others will notice and want to join the group: a large coalition isn’t always best, even if in the long run you'd like everyone to be a runner.


John Borrie


References

Thomas Schelling’s 45 minute audio lecture can be found by visiting the TVO website (http://www.tvo.org), selecting “Big Ideas” from programs A-Z, and then selecting the past episodes page. It’s also possible to subscribe to “Big Ideas” pod casts for free through the iTunes Music Store pod cast directory.

I discussed Schelling and inefficient equilibriums in my chapter entitled “Cooperation and Defection in the Conference on Disarmament”, which can be downloaded by clicking on the pink book ("Thinking Outside the Box...") at the left of this column.

See also Thomas C. Schelling, “Micromotives and Macrobehaviour”, (New York/London, Norton, 1978).