Experimental economics summary paper - Essay Example

Summary Introduction The article of Joyce Berg, John Dickhaut and Kevin McCabe on ‘Trust, Recipro and Social History’ can be best explained based on an experiment using the concept of Investment game. The experiment tried to identify if the fundamental assumption in economics which states that self interest is the basis of how an individual acts particularly when it comes to personal consumption, its amount and its current and future trends has social basis. The economic point of view specifically states that interest and personal consumption are highly associated, more consumption is preferred than less and current and future consumptions influence behavior (Berg, Dickhaut, & McCabe 122).

In line with this assumption, there is a need to challenge existing belief that an individual’s self-interested behavior prevails in the social context of the economic standpoint. Main Findings The article specifically showed that reciprocity is achieved when trust has been developed through personal and social interaction. This was identified in the experiment using the concept of investment game. The belief that self-interest can substantially explain how an individual may behave from an economic standpoint was challenged and proved to be insufficient to give explanation in understanding human behavior in the economic context (Berg, Dickhaut, & McCabe 137).

The concept of trust and reciprocity was found to be dominating in the investment game which implies that individuals try to develop relationship and are willing to give up self-interested motives. The whole point of this is that an individual wants to continue harmonious relationship and aim for stability in order to be treated with fairness and equality in the long run. Another important justification and which could also stand as another important result is the inclusion of social norm as the basis of decision of an individual to go for trust and reciprocity (Berg, Dickhaut, & McCabe 132).

This further implies that an individual’s decision to give trust and reciprocate is developed throughout the time based on social experiences. Description of an important result The proponent would like to emphasize the idea that self-interest is insufficient enough to explain how individual may behave when it comes to deciding to trust or reciprocate. What seems clear about this finding is that self-interest by itself has been transformed into something good and better because of the social norm.

Social norm is something developed over time in the history of mankind (Berg, Dickhaut, & McCabe 132). The idea that humans are motivated by their self interest is true but not everyone wants to be left behind in reality. Thus, one of the ways to be fair in economic dealing is to trust and reciprocate as dictated by the society itself. When an individual is trusted, there is a good chance that he will reciprocate in return (Berg, Dickhaut, & McCabe 137-139). Question The idea of investment in the real world requires one to get something in return out of his investment given.

This is a self-interested concept of human behavior. In the real world, business operates in trust and reciprocity. However, it is obvious that to give trust and be reciprocated is a refine act of self interest. The question now is to how to justify a genuine trust that is beyond the self-interested nature of humans? Failure to answer this question would still give a positive favor for the fundamental assumption in economics. Reference Berg, Joyce, John Dickhaut, and Kevin McCabe. “Trust, Reciprocity and Social History.

” Games and Economic Behavior 10: (1995): 122-142.