24 March 2010

Collective action at home

In another extra credit assignment for my EEP100 students, I asked them to solve a collective action problem in their [group] household. These problems are the kind that drive roommates crazy: one person never washes his dishes, leaving them for others; another one claims that she doesn't have time to take out the trash, etc.

(The assignment required that the student identify a problem, propose a solution, and get all household members to sign an agreement to implement that solution. In hindsight, I should have given this assignment at the start of the semester, to see if promises turned into actions.)

Once again, there were many interesting problems and solutions. (I observed that girls are no better than boys at these types of cooperative games, and that a lot of people have trouble with trash :)

Julia had a great solution [doc] to her household's trash and recycling problem: All five roommates deposit money into the chores jar in advance. As they fulfill their promises, they get their money back. Instead of the typical solution (take money if people for not doing their work), this one created a positive incentive -- payment for doing the work.

Although mathematicians and (some) economists may observe that paying someone with their own money makes no sense, psychologists and economists familiar with prospect theory will see how useful this idea is. People HATE giving up money as fines, but they are pleased to give it up with the promise of getting it back. Once the money is gone, they forget about it, and are HAPPY to be paid -- with their own money -- for doing the task.

Imagine, for example, if people pledged $100 per year toward driving safely. Those who got tickets would get nothing (and maybe pay more); those who did well would get a $100 check at the end of the year :)

Bottom Line: Incentives matter, but timing and flows (fines versus rewards) can turbocharge these incentives.

4 comments:

Josh said...

Very interesting, and yeah, I agree with your timing. Next time, yeah?

Did anybody try this: Each day, everybody puts a buck or so into a jar, and whoever does the chore gets all the money at that time. For example, there is a "trash jar", and every day, everybody in the house puts in a dollar. Whenever somebody takes the trash out, they remove all the money accumulating in the jar.

By the way, I'm curious as to the ability to enforce the agreements. In your example, did people opt out of putting their own money in?

alex t. said...

Hey David,

I was a student in EEP100, and I thought I'd let you know that you inspired me to start a blog of my own:

http://atrembath.blogspot.com/

It's called Energetics, and I think if you'd appreciate what I have to say about blogging in the first post at the bottom of the page.

Thanks for the inspiration! All the best. alex t.

David Zetland said...

@Alex -- wonderful -- and I see that you've already got some good stuff!

David Zetland said...

ES says: girls are way worse than boys at these "types of cooperative games." there should be a sub focus of game theory/econ that is broken down by gender: Pareto Optimality- Does it Exist w/ Girls? Are They Ever Happy?