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Strong Cheap Signals

I'm Bryan Caplan, Professor of Economics at George Mason University and New York Times Bestselling author.

4 days ago

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A basic tenet of game theory is that strong favorable signals must be costly. Why? Because if strong favorable signals weren’t costly, everyone would send them. And if everyone sends strong signals, they cease to be strong. I repeatedly appeal to this principle throughout my Case Against Education. Recently, however, I realized that this tenet isn’t as airtight as I thought.

The problem, in a nutshell, is that most people are impulsive. As a result, they’re prone to casually send bad signals – and even more prone to casually fail to send good signals.

Example: Having friends is extremely helpful in life. As I often chant, “Friendship rules the world.” To make new friends, however, you want to signal your friendliness. The obvious strategic implication: Everyone should aggressively signal their friendliness to potentially useful people with warm smiles, amiable greetings, and kind hospitality.

Since friends are scarce and wonderful, you’d expect this signaling race to be intense. But a half century of experience tells me otherwise. Most people are rather standoffish – especially young people, who have the greatest need to make friends! Even if you’re obviously useful for them, people rarely strive to win you over. Indeed, most don’t even bother to give a smile and an audible greeting.

Would friendliness actually be a good use of people’s time? Almost certainly. Research says that people get half of all jobs through personal connections. And you’re highly unlikely to do a favor for a person who doesn’t even know your name.

How can this situation persist? Because most human beings are both shy and prideful. They fear rejection. And they don’t like to do anything that resembles “sucking up.” The wise consciously bring these impulses under control – and soon start to make friends and influence people. Fortunately for everyone else, the wise are few in number. As a result, plenty of opportunities for the shy and prideful remain. But they would do far better if they just got their impulses under control.

At this point, you could fairly ask, “Wait! Does this mean that seemingly friendly people are actually just people with high impulse control?” No. While most human beings are shy and prideful, a notable minority are sincerely friendly. The pool of people we perceive as friendly actually contains both sincerely friendly people and not-so-friendly people with high impulse control. As the impulsivity of the population rises, the share of apparently friendly people who are sincerely friendly goes up. But so do the social rewards for not-so-friendly people with the impulse control to smile and give a good, “Hello!”

Tautologically, you could object, “Standard signaling models are still correct. We just have to accept that the subjective cost of impulse control is astronomical for most people.” But that still leaves us with a dramatically different picture of the world. In a world where most people refuse to control their counter-productive impulses, there are piles of $20 bills lying on the sidewalk for the minority with productive impulses – as well as the minority who choose to master their emotions.


The Myth of the Rational Voter: Why Democracies Choose Bad Policies - New Edition, – Illustrated (2008)

The greatest obstacle to sound economic policy is not entrenched special interests or rampant lobbying, but the popular misconceptions, irrational beliefs, and personal biases held by ordinary voters. This is economist Bryan Caplan's sobering assessment in this provocative and eye-opening book. Caplan argues that voters continually elect politicians who either share their biases or else pretend to, resulting in bad policies winning again and again by popular demand.

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Bryan Caplan

Published 4 days ago