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Special Function of Money: Maintain Relationship and Cooperation

Special Function of Money: Maintain Relationship and CooperationMoney isn’t everything but without money you have nothing. Money can maintain the relationship and cooperation between people to promote social prosperity.

Human’s ancestors co-operated by organizing small and compact groups. In modern society, social prosperity is based on coordination and effort between strangers. Gabriele Camera, Professor of Economics in Chapman University, Orange County, California, designed a series of experiments with his co-workers to verify the influence of money on human’s behavior. They have found that in a view of evolution, monetary transaction behavior can maintain stability of a growing group. This finding, published on Proceedings of National Academy of Sciences (PNAS, August 27), suggests that money could promote the cooperation between strangers and hence push forward the society to prosperity.

In a number of experiments, the subjects interact with each other pairwisely, while one acts as producer and the other one plays the role of consumer. In the control group, each subject has 8 “consumption unit” resources and producers can choose to help consumers or not.  If a producer decides to help a consumer, then he needs to donate 6 consumption units while the consumer gain 12 consumption units, and the result is that the cooperation is reached; if a producer refuses to help the consumer, then he has no loss. After each round of tests, the role of the subjects is randomly rotated between producer and consumer, and the proportion of “No Help” is reported to the subjects while the subjects are maintained as strangers during the procedure.

The researchers also conduct another experiment with the changing amount of subjects. They have found that as soon as the group reaches a mutually beneficial social consensus, the possibility of offering help reaches to almost 100%. However, as the amount of subjects in the group increases, the chance of offering help decreases continuously, and the average cooperation rate decreased significantly from 70.7% (2-subject group) to 28.5% (32-subject group).

However, when tokens are introduced, the situation is changed. Although token has no actual value, either can it exchange to the consumption unit in the experiments, the existence of tokens gave new choices to the subjects. In addition to spontaneously offering help or no help, producers have other choices such as selling help to exchange tokens, while consumers can keep the tokens to the next round, donate the tokens to producers or pay the tokens for help. Both producers and consumers need make their decisions simultaneously.

The schematic of the mutual help experiment, in which the grey block represents the control group. The rows illustrate producers (white)’choices while the columns demonstrate the consumers (black)’s choices.  Depending on various combinations of producers and consumers, there would be four results, namely inaction, gift, donation and trade.

The schematic of the mutual help experiment, in which the grey block represents the control group. The rows illustrate producers (white)’choices while the columns demonstrate the consumers (black)’s choices.  Depending on various combinations of producers and consumers, there would be four results, namely inaction, gift, donation and trade.

The researchers have found that when trade is feasible, even with large amount of subjects in a group, the cooperation rate still sustained stable. Also, only when the number of subject was large enough, the cooperation rate of the token group is higher than that of the control group. Moreover, when trade is applicable, producers almost no longer offer free help. Plus, when consumers have no tokens and hence trade are unable to proceed, the cooperation rate of the subjects is significantly lower than that of the control group.

The plot of frequency of cooperation versus group size: the solid line indicates the change in cooperation rate of the control group; the dash line shows the change in cooperation rate when trade is possible; the dot line represents the change in cooperation rate when trade is impossible.

The plot of frequency of cooperation versus group size: the solid line indicates the change in cooperation rate of the control group; the dash line shows the change in cooperation rate when trade is possible; the dot line represents the change in cooperation rate when trade is impossible.

The researchers claim that as the development of the society, social behavior tends to heterogenize. The collapse of social consensus makes it difficult to maintain spontaneous cooperation within a society composed of strangers. When people are lack of trust on strangers, the behavior of exchanging cooperation with currency can substitute interpersonal trust and maintain cooperation between individuals. At the same time, the original rule of spontaneous cooperation is replaced with the exchange rule. However, although replaced cooperation can maintain stable during the growth of the group, it will be jeopardized when trade is impossible.

This study demonstrates the behavioral reason for the existence of money. Strangers don’t trust each other, but they trust a token in currency—the trust for currency makes it possible to maintain people’s cooperation. The result is reasonable and meaningful.

SourceEurekAlert!

Image sourceGabriele Camera, Marco Casari, and Maria Bigoni. 2013. Money and trust among strangers. PNAS

 

 

 

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