Popular in Economics

Central Monetary Authorities

Macroeconomic modelling of CBDC: a critical review

European Central Bank Ulrich Bindseil

Central Monetary Authorities

Financing Private Credit

Federal Reserve Bank of New York Nina Boyarchenko

Economics

Failing Banks

Massachusetts Institute of Technology Emil Verner

Economic History

Golden Fetters

UC Berkeley Barry Eichengreen

Economic Inequalities

Visions of Inequality

City University of New York Branko Milanovic

Economics

School Finance Equalization Increases Intergenerational Mobility

Yale University Barbara Biasi

Economics

Olivier Blanchard on U.S. Pandemic-Era Inflation

Peterson Institute for International Economics Olivier Blanchard

Conflict in the Pool

View more insights in Social Sciences - Economics - Behavioral economics

View more figures from University of Queensland

View the page of Marco Faravelli

Read the Study

Next in Behavioral economics

Strategic Conformity or Anticonformity to Avoid Punishment and Attract Reward

Urs Fischbacher | University of Konstanz

A Family of Norms: Related Beliefs about Female Labor Force Participation

Elif Incekara Hafalir | University of Technology Sydney

Marco Faravelli discusses a field experiment that investigates conflict in swimming pools, where an actor moves a swimmer to a less crowded lane, valuing the resource.

Image courtesy of interviewee. March 26, 2024

Log-in or Sign-up to Faculti
Currently viewing this subject insight as a guest. You have insight(s) remaining for this month. Login to view 8000+ figures on the platform.

Generating Workspace...

Export as PDF

The speaker is an academic economist at the University of Queensland, specializing in experimental and behavioral economics. They explain the importance of running experiments with economic agents to compare actual behavior with theoretical predictions. This video video approach helps identify discrepancies between economic theory and real-world behavior, leading to the development of enriched theories that incorporate behavioral elements.

Key points include:

1. **Conflict vs. Competition**: The speaker differentiates conflict from positive competition. Conflict arises when agents engage in costly fights for a prize, resulting in a net loss for society, whereas competition can yield positive outcomes, such as innovation or improved performance.

2. **Field Experimentation**: The speaker's team conducted a field experiment in swimming pools to test conflict theory predictions, which had previously been validated in laboratory settings. They utilized trained actors to simulate conflict situations by requesting swimmers to vacate lanes.

3. **Hypothesis Testing**: They examined two main hypotheses:
- A higher valuation message (indicating urgency for training) would lead to more swimmers leaving the lane.
- The likelihood of a swimmer leaving would decrease if adjacent lanes were crowded.

4. **Findings**: Both hypotheses held true, confirming conflict theory predictions. This video video was significant as it provided external validity to the theoretical models, demonstrating their applicability outside of controlled laboratory settings.

5. **Implications for Economies and Workplaces**: The speaker highlights the negative impact of conflictual situations in environments such as workplaces, where competition can become toxic, leading to inefficiencies and harmful consequences for employee wellbeing and overall business effectiveness.

In summary, the talk emphasizes the value of experimental economics in understanding the dynamics of conflict versus competition and its implications for societal and organizational efficiency.

Language:

Export as PDF

X-TIMESTAMP-MAP=LOCAL:00:00:00.000,MPEGTS:90000

1
00:00:00.155 --> 00:00:00.885
What we did.

2
00:00:01.145 --> 00:00:03.485
Um, this is, I'm an, I'm an economist.

3
00:00:03.485 --> 00:00:04.725
I'm an academic economist.

4
00:00:04.725 --> 00:00:07.285
I'm an associate professor at the University of Queensland,

5
00:00:07.945 --> 00:00:12.245
and I work, in experimental and behavioral economics.

6
00:00:12.245 --> 00:00:15.565
So what you do in experimental economics is

7
00:00:16.865 --> 00:00:21.405
to run experiments with economic agents,

8
00:00:21.475 --> 00:00:26.365
usually most of the time, adult human beings,

9
00:00:26.385 --> 00:00:27.645
but it could also be children

10
00:00:28.105 --> 00:00:32.805
and see how these agents perform compared

11
00:00:32.945 --> 00:00:36.085
to some benchmarks that economic theory gives us.

12
00:00:37.195 --> 00:00:41.655
And this helps us both to understand how economic theory

13
00:00:42.275 --> 00:00:44.135
is predicting economic behavior,

14
00:00:44.205 --> 00:00:46.495
whether it's predicting incorrectly or not.

15
00:00:46.835 --> 00:00:51.695
And when there is a, a clear discrepancy and an obvious

16
00:00:51.795 --> 00:00:55.055
and constant discrepancy in the behavior of

17
00:00:56.165 --> 00:00:59.455
real people in real life compared to

18
00:00:59.485 --> 00:01:04.175
what economic models tell you, then we can try

19
00:01:04.435 --> 00:01:06.455
and figure out what the issues are

20
00:01:06.595 --> 00:01:11.575
and what, with the theory and try and enrich the theory.

21
00:01:11.715 --> 00:01:15.255
And this informs new theories

22
00:01:15.255 --> 00:01:17.455
that often have behavioral elements.

23
00:01:17.485 --> 00:01:18.815
What are behavioral elements?

24
00:01:18.815 --> 00:01:20.855
There are elements that,

25
00:01:23.215 --> 00:01:26.935
rediscuss some fundamental axioms of rationality that are

26
00:01:27.635 --> 00:01:30.495
inside that are the basic of economic theory.

27
00:01:30.955 --> 00:01:34.815
So to give you just an example, people, according

28
00:01:35.035 --> 00:01:37.455
to basic, rational economic theory,

29
00:01:37.875 --> 00:01:39.935
should be completely self-interested

30
00:01:39.955 --> 00:01:42.135
and simply maximize their own profit

31
00:01:42.755 --> 00:01:46.495
or their own goals, payoffs, utility, as we call it.

32
00:01:47.115 --> 00:01:49.215
Uh, but behavioral theory tells us that

33
00:01:49.215 --> 00:01:50.375
that is not always the case.

34
00:01:50.375 --> 00:01:54.655
That cooperation matters that people internalize the payoffs

35
00:01:54.655 --> 00:01:56.215
of other agents, et cetera.

36
00:01:57.435 --> 00:02:00.735
Now, conflict is,

37
00:02:01.375 --> 00:02:04.175
a very important topic that has been studied by,

38
00:02:04.555 --> 00:02:06.215
economic theory.

39
00:02:06.955 --> 00:02:10.855
And, let me first and foremost define conflict.

40
00:02:11.275 --> 00:02:12.775
So we have conflict

41
00:02:13.295 --> 00:02:17.975
whenever we have a situation where two

42
00:02:18.115 --> 00:02:22.615
or more agents, economic agents are

43
00:02:23.655 --> 00:02:26.995
fighting in a costly fight

44
00:02:27.695 --> 00:02:28.795
for a prize.

45
00:02:29.665 --> 00:02:31.515
Okay? You can think, obviously,

46
00:02:31.575 --> 00:02:35.155
of the normal conflict situations that unfortunately we see

47
00:02:35.175 --> 00:02:37.435
around the world worse, right?

48
00:02:37.495 --> 00:02:41.515
But you can see also this in micro conflicts

49
00:02:41.515 --> 00:02:43.555
that are present in everyday's life.

50
00:02:44.655 --> 00:02:49.635
Now, what is special about conflict is that the cost

51
00:02:50.345 --> 00:02:55.195
that these agents that, that

52
00:02:55.265 --> 00:02:58.795
that fight with each other for the price, the cost that they

53
00:02:58.795 --> 00:03:03.225
Are paying is a net loss for society.

54
00:03:03.405 --> 00:03:05.185
So no one gains out of it.

55
00:03:05.685 --> 00:03:09.225
So it would be much more efficient to simply

56
00:03:10.055 --> 00:03:12.625
give the prize initially to either one of them,

57
00:03:12.685 --> 00:03:13.865
to the winner, for instance,

58
00:03:13.885 --> 00:03:18.345
or the conflict without having them expand any efforts,

59
00:03:18.345 --> 00:03:21.705
because these efforts are a complete net loss for society.

60
00:03:22.205 --> 00:03:23.505
So why I'm explaining this

61
00:03:23.505 --> 00:03:27.945
because this is what, differentiates

62
00:03:28.505 --> 00:03:32.815
conflict from positive competition,

63
00:03:33.335 --> 00:03:36.055
positive competition in the sense of competition that,

64
00:03:36.235 --> 00:03:40.455
for instance, an employer may set up a competitive scheme

65
00:03:40.875 --> 00:03:42.255
for the employees, right?

66
00:03:42.435 --> 00:03:44.695
So if I say, well, look, or,

67
00:03:44.715 --> 00:03:47.575
or let's just even think of, research.

68
00:03:47.795 --> 00:03:49.095
If I set the Nobel Prize

69
00:03:49.195 --> 00:03:53.215
and I say, look, the first person who, manages to arrive

70
00:03:53.235 --> 00:03:56.855
to a solution for cancer gets an enormous

71
00:03:57.545 --> 00:04:00.295
award recognition and also money prize.

72
00:04:00.715 --> 00:04:01.855
That's not conflict

73
00:04:02.045 --> 00:04:04.575
because the efforts that

74
00:04:05.395 --> 00:04:08.615
the agents will put in, the researchers will put in,

75
00:04:08.955 --> 00:04:13.695
in the pursuit of the prize are positive for society, right?

76
00:04:13.725 --> 00:04:15.815
They're not a, a net loss,

77
00:04:16.315 --> 00:04:19.575
but in a war, no one gains out of the killing

78
00:04:19.755 --> 00:04:22.295
and destruction that, that, that is part

79
00:04:22.315 --> 00:04:23.415
of, of the conflict.

80
00:04:23.675 --> 00:04:25.735
So this is the difference between conflict

81
00:04:25.915 --> 00:04:28.775
and, a competitive situation

82
00:04:29.475 --> 00:04:32.745
where a principle sets a prize in order

83
00:04:32.805 --> 00:04:37.305
to incentivize agents to produce positive effort

84
00:04:37.375 --> 00:04:39.305
that has a value for society.

85
00:04:41.045 --> 00:04:44.665
Um, so conflict

86
00:04:45.285 --> 00:04:48.665
has been studied in theory a lot in economic theory.

87
00:04:49.285 --> 00:04:53.735
Uh, but it is very difficult to,

88
00:04:54.225 --> 00:04:56.815
study experimentally

89
00:04:57.225 --> 00:05:00.605
where this theory has any bite.

90
00:05:01.665 --> 00:05:02.685
Why is it difficult?

91
00:05:02.875 --> 00:05:04.685
Well, because you can try

92
00:05:04.685 --> 00:05:08.245
and do it in laboratory experiments, and that's been done.

93
00:05:08.535 --> 00:05:11.445
Laboratory experiments are the first part.

94
00:05:11.625 --> 00:05:13.045
The, the historically

95
00:05:13.465 --> 00:05:15.685
how experimental economics was born was

96
00:05:15.685 --> 00:05:16.805
born, exactly like this.

97
00:05:16.865 --> 00:05:19.285
You put people in a lab in front of computers,

98
00:05:19.285 --> 00:05:22.485
they play some abstract economic games

99
00:05:22.935 --> 00:05:27.245
where you reproduce the, the, the, the main features

100
00:05:27.585 --> 00:05:30.085
of the, the model, the economic model.

101
00:05:30.265 --> 00:05:31.765
And you see how people in front

102
00:05:31.785 --> 00:05:35.925
of these computers play incentivized games for real money.

103
00:05:36.865 --> 00:05:39.125
In that case, you can, you can study conflict.

104
00:05:39.425 --> 00:05:43.485
And the main predictions

105
00:05:43.545 --> 00:05:47.365
of conflict theory have been,

106
00:05:48.715 --> 00:05:50.885
have been reproduced in the lab,

107
00:05:51.425 --> 00:05:53.885
but the second step has never been done.

108
00:05:53.905 --> 00:05:55.245
And we are the first to do it.

109
00:05:55.265 --> 00:05:58.205
The second step is to go out in the field, so

110
00:05:58.235 --> 00:06:02.165
outside the lab and see whether, what holds in theory,

111
00:06:02.435 --> 00:06:06.285
what holds in the lab also holds in the field.

112
00:06:07.065 --> 00:06:10.315
Why can't you do it by looking at,

113
00:06:10.695 --> 00:06:12.755
by observing real life data?

114
00:06:13.435 --> 00:06:17.675
'cause real life data is very messy, is so you,

115
00:06:17.775 --> 00:06:19.955
you lose control with real life data.

116
00:06:20.895 --> 00:06:25.395
And so if we are stuck at the situation where we only have,

117
00:06:26.055 --> 00:06:30.195
the lab experiments, then we are not completely sure

118
00:06:30.535 --> 00:06:31.875
of our theory, right?

119
00:06:31.935 --> 00:06:34.475
We don't know the external validity of this theory.

120
00:06:34.535 --> 00:06:36.515
We don't know how people behave in real life.

121
00:06:36.655 --> 00:06:37.715
And as I explained,

122
00:06:38.105 --> 00:06:41.155
real life data are too messy to be controlled.

123
00:06:41.255 --> 00:06:46.015
So what we did was to, set up the first

124
00:06:47.185 --> 00:06:51.055
field experiment to study economic, to study,

125
00:06:51.715 --> 00:06:53.535
the predictions of conflict theory

126
00:06:53.715 --> 00:06:55.615
and to see whether indeed they work.

127
00:06:55.955 --> 00:06:57.775
And as I will explain you, they do,

128
00:06:57.955 --> 00:07:00.215
and I can, I can tell you how we did this.

129
00:07:01.325 --> 00:07:03.745
One part that is very interesting of

130
00:07:04.265 --> 00:07:07.505
constructing experiments, that is,

131
00:07:07.805 --> 00:07:09.865
is the creative part of the design.

132
00:07:10.845 --> 00:07:14.935
And if this is a one case where

133
00:07:15.495 --> 00:07:18.255
I can explain you in a minute,

134
00:07:19.865 --> 00:07:21.565
not many designs would work.

135
00:07:21.665 --> 00:07:24.205
If anything, actually, this is the only design

136
00:07:24.205 --> 00:07:26.245
that in my opinion, can easily work.

137
00:07:26.505 --> 00:07:30.205
And it's easily reproducible for other researchers to try

138
00:07:30.205 --> 00:07:32.085
and reproduce the experiments that we did.

139
00:07:32.755 --> 00:07:36.885
What you want for a conflict situation in the field is

140
00:07:36.885 --> 00:07:41.815
something where you can control the pride, the number

141
00:07:41.875 --> 00:07:46.755
of agents, and any other element,

142
00:07:47.735 --> 00:07:49.875
that I, that I'll tell you in a second.

143
00:07:50.095 --> 00:07:52.355
So let's, let's think of the following.

144
00:07:52.735 --> 00:07:55.955
You could think of studying a conflict situation when you

145
00:07:55.955 --> 00:07:59.585
have some people in a bar queuing

146
00:07:59.725 --> 00:08:01.345
for a drink, right?

147
00:08:01.805 --> 00:08:04.585
That's a long queue. And you could think

148
00:08:04.585 --> 00:08:07.785
that somebody engages with you in the conflict, in the, in,

149
00:08:07.785 --> 00:08:09.665
in a conflict sort situation, in the,

150
00:08:09.665 --> 00:08:10.985
in the queue telling you,

151
00:08:11.125 --> 00:08:13.025
and excuse me, I'm really in a rush.

152
00:08:13.125 --> 00:08:15.425
Do you mind moving? And, and let me pass.

153
00:08:15.925 --> 00:08:17.425
And you may say yes

154
00:08:17.525 --> 00:08:19.745
or no, you may react in many different ways.

155
00:08:20.725 --> 00:08:21.865
Why can't, why? Or,

156
00:08:21.885 --> 00:08:25.585
or for instance, a parking lot, you could try and do it.

157
00:08:25.885 --> 00:08:27.425
The, the price in the case,

158
00:08:27.885 --> 00:08:30.825
the price in the first case is being first in the queue,

159
00:08:30.925 --> 00:08:35.745
in the parking lot is getting the only remaining parking lot

160
00:08:36.165 --> 00:08:40.785
in the supermarkets, park, car park, right?

161
00:08:42.165 --> 00:08:46.865
Why are these situations, these real life is not good

162
00:08:47.285 --> 00:08:49.705
to, to, to, to study what I want to study?

163
00:08:49.775 --> 00:08:53.385
Because there are too many variables

164
00:08:53.385 --> 00:08:54.385
that you cannot control.

165
00:08:54.805 --> 00:08:58.245
You may be in the queue, not alone or in the car.

166
00:08:58.425 --> 00:09:00.565
You may not be alone. You may be with your family,

167
00:09:00.745 --> 00:09:03.365
you may be with your spouse, with your kids.

168
00:09:03.825 --> 00:09:05.405
And when you are in front of other people,

169
00:09:06.065 --> 00:09:08.285
you may be having in a very different situation.

170
00:09:08.305 --> 00:09:10.645
And I cannot control whether that is the case.

171
00:09:10.945 --> 00:09:14.325
You may want to show off in front of others.

172
00:09:14.585 --> 00:09:15.765
You may behave differently

173
00:09:15.765 --> 00:09:18.165
because you're protecting somebody, is

174
00:09:18.165 --> 00:09:19.765
what we call externality.

175
00:09:19.825 --> 00:09:22.365
So you are not caring only about yourself

176
00:09:22.385 --> 00:09:26.365
and your pride, but you caring about many other things.

177
00:09:26.695 --> 00:09:29.725
There are bystanders, there are people who watch this,

178
00:09:29.725 --> 00:09:34.525
can influence the situation, keep the size

179
00:09:34.545 --> 00:09:37.085
of the price, which is being first in the queue

180
00:09:37.305 --> 00:09:40.445
or parking lot, always equivalent

181
00:09:40.445 --> 00:09:43.085
because two different car parks are very different.

182
00:09:43.705 --> 00:09:46.765
Uh, there may be a longer queue in a bar, et cetera.

183
00:09:47.025 --> 00:09:49.365
So what do we do? Why the swimming pool?

184
00:09:49.365 --> 00:09:52.165
Because we thought, as I said, that this is the

185
00:09:53.005 --> 00:09:54.525
possibly the only one we could come out with.

186
00:09:54.585 --> 00:09:56.925
And I'll explain you why it is very appropriate.

187
00:09:58.385 --> 00:10:00.005
Um, I live in Brisbane, Australia.

188
00:10:00.385 --> 00:10:02.565
Uh, it's a sunny city, little bit like Miami.

189
00:10:03.305 --> 00:10:07.085
Uh, so we have really very many

190
00:10:07.905 --> 00:10:11.845
public swimming pools that are open in Brisbane,

191
00:10:12.465 --> 00:10:17.445
and, with eight lanes, 50 meters.

192
00:10:17.905 --> 00:10:19.965
So, the, the Olympic size.

193
00:10:20.425 --> 00:10:24.245
So this is the first, the first reason the swimming pools,

194
00:10:24.265 --> 00:10:28.205
unlike the bar, unlike the car lot are places that are

195
00:10:28.945 --> 00:10:30.165
really standardized.

196
00:10:30.555 --> 00:10:34.255
They're all identical, eight lanes, 50 meters.

197
00:10:35.595 --> 00:10:40.055
Um, so the prize in the experiment is

198
00:10:41.225 --> 00:10:42.985
swimming alone in the pool

199
00:10:44.605 --> 00:10:49.385
or swimming with, with, yeah, swimming.

200
00:10:50.025 --> 00:10:54.585
Swimming with one person less in the pool, asking somebody

201
00:10:54.725 --> 00:10:57.665
to l let you, to give you more space.

202
00:10:59.005 --> 00:11:01.425
So the swimming pool, as I said, is standardized,

203
00:11:02.085 --> 00:11:04.545
and we can measure the number of people

204
00:11:04.575 --> 00:11:07.385
that are in the lanes, in all of the lanes.

205
00:11:07.605 --> 00:11:09.625
We can measure the bystanders.

206
00:11:10.445 --> 00:11:14.385
And this gives us a lot of control.

207
00:11:15.365 --> 00:11:17.065
So, I can try

208
00:11:17.065 --> 00:11:19.345
and explain you how we did this if you want.

209
00:11:20.605 --> 00:11:25.265
So what we did was the following, we, hired

210
00:11:26.045 --> 00:11:29.665
for confederates, as they're called in the literature.

211
00:11:29.665 --> 00:11:32.585
They were actors and they were trained actors.

212
00:11:33.765 --> 00:11:38.145
And these confederates were trained to do the following.

213
00:11:38.145 --> 00:11:39.705
They were two men and two women.

214
00:11:40.535 --> 00:11:42.385
They were trained to do the following.

215
00:11:42.655 --> 00:11:46.905
They would go in when we did this in a number

216
00:11:46.905 --> 00:11:50.185
of swimming pools here in Brisbane, first of all,

217
00:11:50.285 --> 00:11:52.985
we found, we identified the swimming pools

218
00:11:53.045 --> 00:11:54.565
that worked best for our purpose.

219
00:11:54.865 --> 00:11:57.205
So we want the swimming pools that were sufficiently busy,

220
00:11:57.275 --> 00:11:59.085
because if it wasn't busy,

221
00:11:59.195 --> 00:12:01.245
then there is no prize to fight over.

222
00:12:01.245 --> 00:12:02.485
There is no conflicts,

223
00:12:02.745 --> 00:12:05.085
no possible conflicts, conflict towards situations.

224
00:12:05.585 --> 00:12:07.605
So we identified the swimming pools

225
00:12:07.605 --> 00:12:08.805
that are typically quite busy

226
00:12:08.805 --> 00:12:10.725
because they are in the center, et cetera.

227
00:12:11.305 --> 00:12:15.745
And the actors were instructed to do the following, to walk

228
00:12:16.645 --> 00:12:20.145
to each actor was instructed to walk to,

229
00:12:21.685 --> 00:12:25.225
to, to, to, identify together with an array

230
00:12:25.225 --> 00:12:26.265
that was helping the actor.

231
00:12:26.485 --> 00:12:31.125
And, but the array was staying out the, out

232
00:12:31.125 --> 00:12:34.005
of the, out of the situation

233
00:12:34.065 --> 00:12:35.525
and was well hidden so

234
00:12:35.525 --> 00:12:37.565
that nobody could understand what we were doing.

235
00:12:39.185 --> 00:12:41.885
Uh, the array would identify the lane

236
00:12:42.155 --> 00:12:44.925
that had the lowest number of people at

237
00:12:44.925 --> 00:12:46.725
that moment in the pool,

238
00:12:47.395 --> 00:12:50.845
because that is the coveted price, right?

239
00:12:51.385 --> 00:12:52.805
The best lane to go to.

240
00:12:55.065 --> 00:12:56.605
And provided

241
00:12:56.635 --> 00:12:59.165
that there was more than at least one

242
00:12:59.165 --> 00:13:00.405
person in, in that lane.

243
00:13:01.225 --> 00:13:05.045
And then the, the actor would walk

244
00:13:05.145 --> 00:13:09.885
to the shallow end on that lane, enter the pool,

245
00:13:10.265 --> 00:13:13.645
and wait for the first swimmer

246
00:13:14.745 --> 00:13:17.525
to arrive there and to stop at the shallow end

247
00:13:17.585 --> 00:13:18.725
as sometimes they do.

248
00:13:20.155 --> 00:13:24.405
Once the, the swimmer stops and the swimmer is alone,

249
00:13:24.905 --> 00:13:28.725
and nobody is over here in that conversation, then

250
00:13:29.585 --> 00:13:32.365
the actor conveys a message to the swim.

251
00:13:32.785 --> 00:13:35.045
And the message can be twofold,

252
00:13:35.065 --> 00:13:36.165
and I'll tell you in a second,

253
00:13:36.265 --> 00:13:38.765
but basically, the actor is asking the swimmer

254
00:13:40.865 --> 00:13:44.125
in a not rude, but not even a polite way to leave

255
00:13:44.635 --> 00:13:47.965
because the actor needs to train.

256
00:13:49.365 --> 00:13:52.985
Okay? So the message was, excuse me, I need to train.

257
00:13:54.085 --> 00:13:55.705
Do you mind moving to another lane?

258
00:13:56.325 --> 00:13:58.825
But the message has to be precise.

259
00:13:59.245 --> 00:14:00.985
You cannot change it over time, because

260
00:14:00.985 --> 00:14:03.785
otherwise you are, you are comparing oranges and bananas.

261
00:14:04.325 --> 00:14:07.985
So you want this message to be clear, concise,

262
00:14:08.485 --> 00:14:09.705
and always the same,

263
00:14:10.005 --> 00:14:13.265
and not too apologetic, not too kind, not to smile

264
00:14:13.775 --> 00:14:15.785
because the situation is conflictual.

265
00:14:16.565 --> 00:14:19.345
And so you are asking this person to leave, okay?

266
00:14:19.765 --> 00:14:24.385
And then we measure how the,

267
00:14:24.685 --> 00:14:26.225
the swimmer reacts.

268
00:14:27.405 --> 00:14:31.245
And the message could be one of two types.

269
00:14:31.825 --> 00:14:34.005
It could be, excuse me, do you mind leaving

270
00:14:34.005 --> 00:14:37.325
because I need to train versus do you mind leaving?

271
00:14:37.325 --> 00:14:39.765
Because I need to tr because I really need

272
00:14:39.765 --> 00:14:42.285
to train this tomorrow I have a raise.

273
00:14:43.925 --> 00:14:46.105
So the second message is almost identical,

274
00:14:46.325 --> 00:14:50.705
but it conveys a higher valuation for the actor.

275
00:14:51.515 --> 00:14:55.565
Okay? So you can see that what we did was

276
00:14:56.225 --> 00:14:58.045
the hypothesis that we wanted, we wanted

277
00:14:58.045 --> 00:14:59.245
to test were twofold.

278
00:14:59.855 --> 00:15:03.005
First of all, all else constant.

279
00:15:04.075 --> 00:15:06.325
Does the higher valuation message,

280
00:15:09.365 --> 00:15:13.635
lead to

281
00:15:14.825 --> 00:15:16.355
more people leaving the lane?

282
00:15:16.785 --> 00:15:19.395
More swimmers, people in the are, are swimmers more likely

283
00:15:19.415 --> 00:15:21.515
to leave the lane when they hear the

284
00:15:21.515 --> 00:15:22.715
highest valuation message.

285
00:15:24.785 --> 00:15:26.525
And this is the first hypothesis,

286
00:15:26.585 --> 00:15:28.525
and this is what conflict theory tells us,

287
00:15:28.665 --> 00:15:30.045
and why does it tell us this?

288
00:15:30.155 --> 00:15:34.685
Because basically, if I am showing a higher valuation,

289
00:15:35.555 --> 00:15:39.165
imagine in a war, if I'm showing that I really care about

290
00:15:39.845 --> 00:15:41.605
a piece of land I'm fighting for,

291
00:15:42.235 --> 00:15:45.525
then you may be more cautious in attacking me

292
00:15:45.525 --> 00:15:46.885
or intervening in a conflict

293
00:15:46.885 --> 00:15:48.325
or entering into conflict with me,

294
00:15:48.755 --> 00:15:51.125
because the more I value it,

295
00:15:51.125 --> 00:15:53.245
the more likely I am to fight over it.

296
00:15:55.885 --> 00:15:57.465
The second thing that we test,

297
00:15:58.245 --> 00:16:01.305
and that again, is supported by economic theory is,

298
00:16:01.605 --> 00:16:04.345
or con theory of conflict, is that

299
00:16:05.715 --> 00:16:10.385
the all Ls QL, the person is more likely

300
00:16:10.885 --> 00:16:14.785
to leave the lane,

301
00:16:15.885 --> 00:16:19.445
the less crowded the other lanes are,

302
00:16:19.755 --> 00:16:23.975
because again, the, the less crowded they are,

303
00:16:24.395 --> 00:16:26.615
the lower is the price of staying in that lane.

304
00:16:26.715 --> 00:16:28.455
But if it's really, really crowded

305
00:16:28.555 --> 00:16:32.415
and you are in the least crowded lane, you don't wanna give,

306
00:16:32.475 --> 00:16:34.615
you are less likely to give it up, right?

307
00:16:34.615 --> 00:16:37.975
Because this is like all else equal increase in the

308
00:16:37.975 --> 00:16:40.775
valuation of the swimmer for the, for the prize.

309
00:16:41.195 --> 00:16:43.775
So these are the two things that we test.

310
00:16:44.525 --> 00:16:47.215
Well, the conclusions are that,

311
00:16:47.485 --> 00:16:49.575
both these hypothesis work.

312
00:16:50.035 --> 00:16:54.415
So what we see is that the more, when,

313
00:16:54.415 --> 00:16:58.615
when the actor uses the high valuation message, it, the,

314
00:16:58.755 --> 00:17:00.975
the, the swimmers are more likely to leave.

315
00:17:02.785 --> 00:17:06.405
And this supports the, the economic theory of conflict.

316
00:17:07.665 --> 00:17:10.925
And the second one is that indeed the,

317
00:17:11.425 --> 00:17:13.765
the more are the other lanes

318
00:17:14.225 --> 00:17:18.925
or the adjacent lanes the least, the less likely is

319
00:17:19.585 --> 00:17:21.645
the, the, the, the swimmer to leave.

320
00:17:22.155 --> 00:17:26.445
Okay? And again, this, this is as hypothesized.

321
00:17:27.025 --> 00:17:29.805
So this is foundationally important

322
00:17:29.835 --> 00:17:34.405
because so far we could not through observational data,

323
00:17:34.545 --> 00:17:37.485
see whether this kind of behavior was,

324
00:17:37.825 --> 00:17:40.005
was indeed supported by data.

325
00:17:40.385 --> 00:17:43.605
So it's the first experiment that goes outside the lab

326
00:17:43.985 --> 00:17:46.365
and that lands external validity

327
00:17:46.465 --> 00:17:48.805
to this deal. I think it's important

328
00:17:48.825 --> 00:17:51.725
To consider, as I said from the start, that

329
00:17:52.375 --> 00:17:56.005
there is a fundamental difference between conflict

330
00:17:56.465 --> 00:17:58.685
and, competition.

331
00:18:00.125 --> 00:18:02.865
And competition is not necessarily a bad thing

332
00:18:03.085 --> 00:18:04.825
as economists like competition.

333
00:18:05.165 --> 00:18:09.225
So for instance, if we, move from this abstract setting

334
00:18:09.645 --> 00:18:13.945
to, the, the abstract,

335
00:18:14.605 --> 00:18:18.065
attempt to, to, to, to,

336
00:18:18.125 --> 00:18:20.985
to check whether the economic theory predictions actually

337
00:18:21.125 --> 00:18:24.705
are indeed supported by data, we can try

338
00:18:24.705 --> 00:18:27.305
and think of what happens in, in the workplace.

339
00:18:28.245 --> 00:18:29.505
So in the workplace,

340
00:18:30.745 --> 00:18:35.105
whenever, the boss, the principal,

341
00:18:35.215 --> 00:18:37.545
sets up a competitive scheme to try

342
00:18:37.545 --> 00:18:39.945
and incentivize the employees to

343
00:18:40.695 --> 00:18:42.905
work harder, that is a good thing.

344
00:18:43.165 --> 00:18:47.145
But when that is not the case, and it is often so

345
00:18:47.145 --> 00:18:50.345
because there are conflictual situations in,

346
00:18:50.485 --> 00:18:54.945
in the workplace, well, we can see that the more

347
00:18:56.295 --> 00:19:00.955
the, the more conflictual the situation, the,

348
00:19:01.175 --> 00:19:05.355
the more waste of resources you are gonna end up having.

349
00:19:05.495 --> 00:19:10.355
So you may end up having toxic, workplace environments

350
00:19:11.065 --> 00:19:13.875
precisely reproducing what I've been talking about.

351
00:19:14.415 --> 00:19:18.195
So you may have situations where a conflictual situ,

352
00:19:18.355 --> 00:19:19.955
a conflictual situation emerges

353
00:19:19.985 --> 00:19:23.915
because employees are fighting over

354
00:19:24.055 --> 00:19:25.155
scarce resources.

355
00:19:25.535 --> 00:19:29.075
And this is not because of a competitive scheme, but it's

356
00:19:29.075 --> 00:19:31.515
because the resources has have,

357
00:19:31.515 --> 00:19:33.595
have been set in a certain way.

358
00:19:33.735 --> 00:19:36.955
And there, there is a conflict of situation happening.

359
00:19:37.655 --> 00:19:41.515
So you can, you can see this the same kind of scenarios

360
00:19:41.515 --> 00:19:43.755
that have been talking about reproducing in a workplace.

361
00:19:43.855 --> 00:19:46.475
And this has potentially,

362
00:19:46.745 --> 00:19:50.835
very negative consequences on the wellbeing of employees

363
00:19:50.895 --> 00:19:53.075
as well as on the efficiency of the business.

Understanding Conflict in Behavioral Economics

00:00:00 - What we did. this is, I'm an, I'm an economist. I'm an academic economist. I'm an associate professor at the University of Queensland, and I work, in experimental and behavioral economics. So what you do in experimental economics is to run experiments with economic agents, usually most of the time, adult human beings, but it could also be children and see how these agents perform compared
00:00:37 - And this helps us both to understand how economic theory is predicting economic behavior, whether it's predicting incorrectly or not. And when there is a, a clear discrepancy and an obvious and constant discrepancy in the behavior of real people in real life compared to what economic models tell you, then we can try
00:01:06 - and what, with the theory and try and enrich the theory. And this informs new theories that often have behavioral elements. What are behavioral elements? There are elements that, rediscuss some fundamental axioms of rationality that are inside that are the basic of economic theory. So to give you just an example, people, according
00:01:37 - should be completely self-interested and simply maximize their own profit or their own goals, payoffs, utility, as we call it. but behavioral theory tells us that that is not always the case. That cooperation matters that people internalize the payoffs of other agents, et cetera. Now, conflict is, a very important topic that has been studied by, economic theory.
00:02:11 - So we have conflict whenever we have a situation where two or more agents, economic agents are fighting in a costly fight for a prize. Okay? You can think, obviously, of the normal conflict situations that unfortunately we see around the world worse, right?
00:02:41 - that are present in everyday's life. Now, what is special about conflict is that the cost that these agents that, that that fight with each other for the price, the cost that they Are paying is a net loss for society. So no one gains out of it. So it would be much more efficient to simply

Distinguishing Conflict from Positive Competition

00:03:12 - to the winner, for instance, or the conflict without having them expand any efforts, because these efforts are a complete net loss for society. So why I'm explaining this because this is what, differentiates conflict from positive competition, positive competition in the sense of competition that, for instance, an employer may set up a competitive scheme
00:03:42 - So if I say, well, look, or, or let's just even think of, research. If I set the Nobel Prize and I say, look, the first person who, manages to arrive to a solution for cancer gets an enormous award recognition and also money prize. That's not conflict because the efforts that the agents will put in, the researchers will put in, in the pursuit of the prize are positive for society, right?
00:04:16 - but in a war, no one gains out of the killing and destruction that, that, that is part of, of the conflict. So this is the difference between conflict and, a competitive situation where a principle sets a prize in order to incentivize agents to produce positive effort that has a value for society. so conflict
00:04:49 - but it is very difficult to, study experimentally where this theory has any bite. Why is it difficult? Well, because you can try and do it in laboratory experiments, and that's been done. Laboratory experiments are the first part. The, the historically how experimental economics was born was
00:05:16 - You put people in a lab in front of computers, they play some abstract economic games where you reproduce the, the, the, the main features of the, the model, the economic model. And you see how people in front of these computers play incentivized games for real money. In that case, you can, you can study conflict. And the main predictions of conflict theory have been,
00:05:51 - but the second step has never been done. And we are the first to do it. The second step is to go out in the field, so outside the lab and see whether, what holds in theory, what holds in the lab also holds in the field. Why can't you do it by looking at, by observing real life data? 'cause real life data is very messy, is so you, you lose control with real life data.

Testing Economic Theory Through Field Experiments

00:06:26 - the lab experiments, then we are not completely sure of our theory, right? We don't know the external validity of this theory. We don't know how people behave in real life. And as I explained, real life data are too messy to be controlled. So what we did was to, set up the first field experiment to study economic, to study,
00:06:53 - and to see whether indeed they work. And as I will explain you, they do, and I can, I can tell you how we did this. One part that is very interesting of constructing experiments, that is, is the creative part of the design. And if this is a one case where I can explain you in a minute, not many designs would work. If anything, actually, this is the only design
00:07:26 - And it's easily reproducible for other researchers to try and reproduce the experiments that we did. What you want for a conflict situation in the field is something where you can control the pride, the number of agents, and any other element, that I, that I'll tell you in a second. So let's, let's think of the following. You could think of studying a conflict situation when you
00:07:59 - for a drink, right? That's a long queue. And you could think that somebody engages with you in the conflict, in the, in, in a conflict sort situation, in the, in the queue telling you, and excuse me, I'm really in a rush. Do you mind moving? And, and let me pass. And you may say yes or no, you may react in many different ways. Why can't, why? Or, or for instance, a parking lot, you could try and do it. The, the price in the case,
00:08:30 - in the parking lot is getting the only remaining parking lot in the supermarkets, park, car park, right? Why are these situations, these real life is not good to, to, to, to study what I want to study? Because there are too many variables that you cannot control. You may be in the queue, not alone or in the car.
00:09:00 - you may be with your spouse, with your kids. And when you are in front of other people, you may be having in a very different situation. And I cannot control whether that is the case. You may want to show off in front of others. You may behave differently because you're protecting somebody, is what we call externality. So you are not caring only about yourself and your pride, but you caring about many other things. There are bystanders, there are people who watch this,

Swimming Pools as Experimental Conflict Settings

00:09:34 - of the price, which is being first in the queue or parking lot, always equivalent because two different car parks are very different. there may be a longer queue in a bar, et cetera. So what do we do? Why the swimming pool? Because we thought, as I said, that this is the possibly the only one we could come out with. And I'll explain you why it is very appropriate. I live in Brisbane, Australia.
00:10:03 - so we have really very many public swimming pools that are open in Brisbane, and, with eight lanes, 50 meters. So, the, the Olympic size. So this is the first, the first reason the swimming pools, unlike the bar, unlike the car lot are places that are really standardized.
00:10:35 - so the prize in the experiment is swimming alone in the pool or swimming with, with, yeah, swimming. Swimming with one person less in the pool, asking somebody to l let you, to give you more space. So the swimming pool, as I said, is standardized,
00:11:04 - that are in the lanes, in all of the lanes. We can measure the bystanders. And this gives us a lot of control. So, I can try and explain you how we did this if you want. So what we did was the following, we, hired for confederates, as they're called in the literature. They were actors and they were trained actors.
00:11:38 - They were two men and two women. They were trained to do the following. They would go in when we did this in a number of swimming pools here in Brisbane, first of all, we found, we identified the swimming pools that worked best for our purpose. So we want the swimming pools that were sufficiently busy, because if it wasn't busy, then there is no prize to fight over. There is no conflicts, no possible conflicts, conflict towards situations.
00:12:07 - that are typically quite busy because they are in the center, et cetera. And the actors were instructed to do the following, to walk to each actor was instructed to walk to, to, to, to, identify together with an array that was helping the actor. And, but the array was staying out the, out of the, out of the situation and was well hidden so that nobody could understand what we were doing.

Studying Behavior in Swimming Pool Conflicts

00:12:42 - that had the lowest number of people at that moment in the pool, because that is the coveted price, right? The best lane to go to. And provided that there was more than at least one person in, in that lane. And then the, the actor would walk to the shallow end on that lane, enter the pool,
00:13:14 - to arrive there and to stop at the shallow end as sometimes they do. Once the, the swimmer stops and the swimmer is alone, and nobody is over here in that conversation, then the actor conveys a message to the swim. And the message can be twofold, and I'll tell you in a second, but basically, the actor is asking the swimmer
00:13:44 - because the actor needs to train. Okay? So the message was, excuse me, I need to train. Do you mind moving to another lane? But the message has to be precise. You cannot change it over time, because otherwise you are, you are comparing oranges and bananas. So you want this message to be clear, concise, and always the same, and not too apologetic, not too kind, not to smile
00:14:16 - And so you are asking this person to leave, okay? And then we measure how the, the swimmer reacts. And the message could be one of two types. It could be, excuse me, do you mind leaving because I need to train versus do you mind leaving? Because I need to tr because I really need to train this tomorrow I have a raise.
00:14:46 - but it conveys a higher valuation for the actor. Okay? So you can see that what we did was the hypothesis that we wanted, we wanted to test were twofold. First of all, all else constant. Does the higher valuation message, lead to
00:15:16 - More swimmers, people in the are, are swimmers more likely to leave the lane when they hear the highest valuation message. And this is the first hypothesis, and this is what conflict theory tells us, and why does it tell us this? Because basically, if I am showing a higher valuation, imagine in a war, if I'm showing that I really care about a piece of land I'm fighting for, then you may be more cautious in attacking me

Behavioral Economics: Conflict and Competition Insights

00:15:46 - or entering into conflict with me, because the more I value it, the more likely I am to fight over it. The second thing that we test, and that again, is supported by economic theory is, or con theory of conflict, is that the all Ls QL, the person is more likely to leave the lane,
00:16:19 - because again, the, the less crowded they are, the lower is the price of staying in that lane. But if it's really, really crowded and you are in the least crowded lane, you don't wanna give, you are less likely to give it up, right? Because this is like all else equal increase in the valuation of the swimmer for the, for the prize. So these are the two things that we test. Well, the conclusions are that,
00:16:50 - So what we see is that the more, when, when the actor uses the high valuation message, it, the, the, the swimmers are more likely to leave. And this supports the, the economic theory of conflict. And the second one is that indeed the, the more are the other lanes or the adjacent lanes the least, the less likely is
00:17:22 - Okay? And again, this, this is as hypothesized. So this is foundationally important because so far we could not through observational data, see whether this kind of behavior was, was indeed supported by data. So it's the first experiment that goes outside the lab and that lands external validity to this deal. I think it's important To consider, as I said from the start, that
00:17:56 - and, competition. And competition is not necessarily a bad thing as economists like competition. So for instance, if we, move from this abstract setting to, the, the abstract, attempt to, to, to, to, to check whether the economic theory predictions actually are indeed supported by data, we can try
00:18:28 - So in the workplace, whenever, the boss, the principal, sets up a competitive scheme to try and incentivize the employees to work harder, that is a good thing. But when that is not the case, and it is often so because there are conflictual situations in, in the workplace, well, we can see that the more

Workplace Conflict and Resource Waste

00:19:01 - the more waste of resources you are gonna end up having. So you may end up having toxic, workplace environments precisely reproducing what I've been talking about. So you may have situations where a conflictual situ, a conflictual situation emerges because employees are fighting over scarce resources. And this is not because of a competitive scheme, but it's
00:19:50 - have been set in a certain way. And there, there is a conflict of situation happening. So you can, you can see this the same kind of scenarios that have been talking about reproducing in a workplace. And this has potentially, very negative consequences on the wellbeing of employees as well as on the efficiency of the business.

Faculti AI can make mistakes

Research

Policy

Analysis