Selfish Behavior Leads to Inefficiency

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Selfish Behavior Leads to Inefficiency

In the language of Game Theory (http://en.wikipedia.org/wiki/Game_theory), a zero-sum game is a situation in which one player’s (person’s) success comes at the other’s expense. For example, if I take a big piece of cake, there is less cake left for everyone else. This is also known as a “rivalrous good” in Economics. While this is a nice model for many situations, many people (although surely unknowingly) constantly apply this model to situations which do not follow these rules.

Consider two examples – merging onto a highway and an airport baggage claim.

1) Merging onto a highway

You will encounter this situation on nearly every on-ramp – you need to merge onto the highway, but a driver in the right hand lane already on the highway does not move over to allow you to do so at the best time. The driver on the highway’s mindset is “If I slow down to let them in, I will have slowed my progress toward my destination”. The driver on the on-ramp’s mindset then becomes “What a jerk! Driving is so annoying! I’m not going to let anyone in either!” If this event happened only once during their commute, the driver on the highway would certainly be correct. However, this is not the case. The driver on the highway will surely be the person trying to merge at some point, and when another driver chooses not to let them merge (probably because someone recently did not let them merge), they will then experience the same reduction in progress that they would have in the first situation.

Of course you cannot stop on the highway to let in all of the cars on the on ramp. The solution here is to let in one person for every person that lets you in. This directly leads to more efficient traffic flow and indirectly leads to fewer accidents, less road rage, and an overall happier society.

2) Airport baggage claim

If you’ve ever been to an airport (which I was just recently over the holidays), you will certainly relate to the following. You get off the plane, walk to the baggage claim, and are met with hundreds of people pushing and shoving in order to be as close to the conveyor belt as possible. The mindset is “if I step closer to the conveyor belt, I will be able to see better and thus get my bag faster.” This is indeed true – initially. However, the issue is that since everyone has this same mindset, almost immediately the crowd has so closely surrounded the conveyor that a large portion of the population cannot see the bags at all. They have not made it to the “front” and even the people who have made it to the “front” cannot see more than a few feet because of all of the other people crowded around the conveyor, who, by the way, are having the same issue.

If you told one of these people “Hey, if you step back, you can actually see better”, they would say you are crazy, and they would be right. However, if you told ALL of these people that if they all step back they could all see better, they would find you were correct! If all those crowded around the conveyor belt stood back five feet, everyone would be able to see the incoming luggage. All would be able to see better and get their bags faster.  There are also extra benefits. Each person, when it is their time to get their bag, has much more space in which to do so. Additionally, the stress level of all individuals will be greatly decreased, leading to a “nicer” society in general.

Summary

I would always suggest working for the “good of the whole”, but people are inherently so greedy that they would never agree with “do it because it is good for the whole, and don’t worry about the cost to you”. In fact, one of the basic, implied assumptions in economics is that people are self-interested actors. However, I have presented two examples where acting in the interest of the group does NOT reduce the benefit to the individual, but rather increases the benefit to both the individual and the group. This is something that you could convince even a greedy person of – they simply had not thought about it enough to come to this conclusion. Though it is hard to disagree with, it is equally as hard to explain to a crowd 🙂

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