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Faculty & Research Me Versus We: Balancing Cooperation and Competition in Groups Through Emotional Algorithms by C. Loch S. Schneider and C. Galunic 2003/74/TM Working Paper Series ME VERSUS WE: BALANCING COOPERATION AND COMPETITION IN GROUPS THROUGH EMOTIONAL ALGORITHMS Christoph H. Loch, INSEAD and HP Labs Susan Schneider, HEC Genève Charles Galunic, INSEAD September 24, 2003 Working Paper Me versus We: Balancing Cooperation and Competition in Groups through Emotional Algorithms This paper examines emotional algorithms and their role in a fundamental dilemma that confronts human groups—whether actors should take care of “me” (compete) or take care of “we” (cooperate). We argue that human emotions, triggered in algorithmic fashion through four common, albeit culturally specified, mechanisms, powerfully direct humans to compete or cooperate. Drawing on evolutionary theory and work within evolutionary psychology, we first identify and characterize these hard-wired emotional algorithms, presenting evidence for their independent existence and influence. Their regulatory influence on human groups, however, can only be appreciated once we examine them as a system. We show how, as a system, these algorithms help explain the dynamic balance that members of human groups can (and often must) achieve between competition and cooperation. We derive three propositions regarding how these algorithms play out in groups and conclude with a discussion of this system’s evolutionary origins. We also suggest that understanding these dynamics can help leaders better manage cooperation and competition in organizational groups. 1. INTRODUCTION: THE FUNDAMENTAL DILEMMA OF SOCIAL GROUPS Most of human history happened in relatively small groups of between 50-150 people (Dunbar 1996a) where individuals were naturally and frequently faced with a fundamental dilemma: the pursuit of self-interest versus the pursuit of group interest. Excessive self-interest could mean a lack of coordinated effort, and so expose the group—and the individual—to greater environmental risks, such as other tribes and non- human predators (Sober and Wilson, 1998). Excessive cooperation, on the other hand— such as taking the vanguard position during battles—could leave individuals exploited by fellow members and faced with lower survival chances. Indeed, this dilemma of cooperation versus competition is timeless to our species and has attracted the attention of various scientists and approaches (e.g., Kramer 1991, Axelrod 1997, Dawes & Messick 2000). For instance, the conflict of “me versus we” is perhaps most famously explored in economics, in the form of the tragedy of the commons—i.e., the failure to maintain a public good because the individual gains the full and immediate benefits of use while sharing the cost of degradation (e.g., pastures, fisheries, pollution, see Hardin 1968). Here, self-interest and (indirect) competition is presumed to trump cooperation, and largely because of the imbalance of incentives facing an actor. In fact, the most common view of this dilemma is to regard it as essentially an interplay of the incentives facing the actor—whether to compete or cooperate is portrayed as an analytical response to the structure of incentives. Notwithstanding the usefulness of these approaches, their adoption of a predominantly rational view of this dilemma is excessively restricted. Whether an actor decides to compete or cooperate is presumed to be a question of reason and cognition, not 1 emotion, and so calculations appear relatively flexible and immediate, effectively uninfluenced by any deeper, latent structures of the human mind, such as our emotional proclivities. Indeed, much of the work on this dilemma within sociology and economics is based on a boundedly-rational decision maker weighing the tradeoffs, short-term and long, between cooperative and competitive behavior (e.g., Axelrod 1997, Frank 1988, Lin 1990, Runciman 1998, Burt 2000). Not surprisingly, much of the spotlight is placed on the logical nature of these tradeoffs, and so the human actor is effectively reduced to the role of a calculator, although, it is acknowledged, an imperfect one. While no one would dispute the importance of cognition to our understanding of this dilemma, we believe there is much more that informs human decision making when it comes to questions of cooperation or competition. For example, while economists have long proposed property rights and incentive systems to resolve the tragedy of the commons (e.g., Ostrom 1990), it has been shown that traditional pastoralists are well able to sustainably manage their commons not with property rights but through norms of mutual reciprocity and what has been called emotional interdependence (Niamir-Fuller 2002). Also, work in social psychology suggests that while competition for shared resources may create conflict within organizational groups, it is highly influenced by categorizations of group membership (i.e. the salience of higher-order commonalities) such that in-group versus out-group delineations skew any incentives that may be present (e.g., Kramer 1991, Dawes & Messick 2000). In other words, emotional responses to social arrangements, operating alongside cognition, have a role to play in the explanation of competitive and cooperative behavior. Moreover, neurologists have shown strong evidence that rational reasoning alone does 2 not enable humans to make good social decisions if divorced from their emotions (e.g., Damasio 1994, LeDoux 1996). And yet it is precisely the role of emotions that has largely been neglected in social dilemmas: It's not that human beings are not rational – we are. The point is that we are not only rational. What makes us human is the addition of a rational mind to a preexisting emotional base (Massey 2002, 2; see also Nowak et al. 2000). That emotions should matter to human decision making and behavior is receiving increasing attention amongst organizational scholars (e.g., Heath, Bell, and Sternberg 2001; Lawler, Thye & Yoon 2000). The role of emotions in cooperative versus competitive behavior, however, has been under-explored. It deserves particular attention because recent research into the constitution of human emotions and their origins in human evolution suggests that certain emotional responses are algorithmic in nature (Le Doux 1996, Damasio 1999) and tightly intertwined with the dilemma of cooperation vs. competition that has been ever present throughout the evolutionary history of our species. The human mind is deeply rooted with emotion-laden algorithms that help direct behavior in the presence of dilemmas in cooperation. For example, the work of neurologist Damasio (1999) is compelling in its depiction of the automaticity and evolutionary functionality of emotions. They are seen as … complicated collections of chemical and neural responses, forming a pattern; all emotions have some kind of regulatory role to play, leading in some way or another to the creation of circumstances advantageous to the organism. (…) Notwithstanding the reality that learning and culture alter the expression of emotions, (…) they are biologically determined processes. (…) The considerable amount of individual variation and the fact that culture plays a role in shaping some inducers does not deny the fundamental stereotypicity, automaticity, and regulatory purpose of the emotions (Damasio 1999: 51). Others have also suggested that emotions operate as an unconscious, “hard-wired” intelligence, which proved—on average—adaptive in the past (Plotkin 1993) and serve a 3 regulatory role. According to this view, emotions are behavioral predispositions that can offer survival advantage—such as the preparation for evasive or aggressive action in a threatening situation (see Griffiths 1997, Damasio 1999). Focusing specifically on competition vs. cooperation, evolutionary theorists argue that the dilemma of taking care of “me versus we” is imprinted on our minds as rules-of- thumb or algorithms that operate through the arousal of emotions and have evolved to become programmed and inherited (Cosmides & Tooby 1992). Of course, these algorithms do not operate by emotion alone, but neither are they simply composed of conscious cognitive analysis—our mental capacities are simply not sufficient (e.g., LeDoux 1996, Damasio 1994 and 1999). These “me versus we” algorithms are triggered by generic social circumstances and, in turn, arouse emotions. As they are not emotions themselves, we will simply refer to them as emotional algorithms. What is important is that certain and specific social circumstances are capable of triggering emotional states which are experienced as ends in themselves, capable of giving satisfaction just through the fulfillment of accompanying behavior—for example, helping a friend in need can be emotionally satisfying in itself, regardless of the favors it engenders. Our basic argument is that these emotion-laden algorithms significantly inform the dilemma of competition versus cooperation and deserve our attention. Relatedly, most theories of emotion address the basic emotions, such as fear, anger, joy, sadness, disgust, guilt, etc., and largely concern the release of these emotions through events that are singularly focused on an individual and the fulfillment of his/her interests, such as his/her success or failure to attain goals (Scherer 1988, Ekman & Friesen 1971; Frijda 1993, LeDoux 1996). They do not, however, target social dilemmas, 4 such as competition versus cooperation. Certainly, emotions are

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