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Economics of Trust, Altruism, and Corporate Responsibility* Roland N. McKean Greater ability to trust each other to stick with agreed-upon rules would save many costs and make life much pleasanter. It would economize on locks and keys, safes and vaults, guards, monitoring devices and procedures, some of the fine print in contracts, and, perhaps most important of all, time and anguish for everyone. It might make life still less costly (or more pleasant) if, in addition, concern for others was more prominent in our utility functions-that is, if we were less selfish. These are different phenomena-trust and altruism; the former means trusting each other to adhere to relatively specific written, oral, or tacitly understood agreements ("keeping one's word"), while unselfishness means concern for others without reference to any agreement governing specific behavior. Selfishness is not the same thing, incidentally, as pursuing self-interest or maximizing utility, for the latter merely means purposeful behavior to achieve whatever yields preferredness. Whether or not less selfishness would yield greater well-being has to be conjectural. Conceptually, we can think of a utility frontier taking into account not only people's tastes for conventional goods but also their tastes for helping (or injuring) each other. If there were zero transaction costs, people would hire each other to behave as if they had the optimal degree of concern for each other. Hiring people to like one gets into seemingly paradoxical questions, though:·The author is indebted to the NSF grant to the Thomas Jefferson Center Foundation for studying the implications of different resource rights. Thanks are due also to Russell Sage Foundation, the sponsor of the Conference on Altruism, and, for criticisms and suggestions, to John H. Moore and Roger Sherman of the University of Virginia, and to James M. Buchanan of Virginia Polytechnic Institute and State University. 29 30 • ALTRUISM, MORALITY, AND ECONOMIC THEORY "How much must I offer to get you to love me for myself quite apart from my offer?" If people felt that way to begin with, this degree of concern would exist even with real-world transaction costs. In this real world, however, the optimal degree of unselfishness cannot be determined, though it seems almost certain that the extremes,1 complete selfishness or complete unselfishness, would yield horrible spillovers (maybe non-survival). Extreme altruism, for instance, would mean either ceaseless misguided meddling or enormous information costs in finding out what other people wanted (yet what they would want in turn would be to help other meddlers). I myself judge, however, that somewhat more altruism. or more evenly dispersed altruism, would be an improvement.2 To me it appears non-optimal and downright discouraging when people are unwilling to give up a few seconds of their time in order to take up one parking space instead of two or when one man's unremitting concern for himself alone can make an entire organization miserable. (When I speak of "optimal concern or non-optimal selfishness, I have to consider altruism as a process or means for achieving other things. If I count different degrees of altruism as different utility functions, I have no basis for saying that one degree can yield Pareto optimality while some other degree cannot.) Maybe one should stress, however, that the glass is half full instead of half empty, for the roles now played by both trust and unselfishness are remarkable, when one stops to think about it. ROLES PLAYED BY TRUST, ALTRUISM Life would be nasty, brutish, and poverty-stricken indeed, if there were no mutual trust and voluntary compliance at all. Even their short-run self-interest must have caused most persons to recognize this during the earliest history of man. It must have been apparent to almost everyone that it was economical (better) if each person could have considerable confidence in the other's word regarding exchanges, division of tasks in hunting (or warfare), information about hunting grounds, appointments, or promises of any sort. At some point, traditions and rules of etiquette arose-presumably to reduce external costs that were being inflicted on each other or to increase external benefits that would otherwise be withheld from each other (Charnovitz). Parents taught their offspring to follow these rules, and thus each person could (usually) expect certain kinds of behavior from the other, i.e., trust the other to adhere to the I Selfishness is not the real extreme. As Boulding says. "The real world is so shot through with a complex network...

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Additional Information

ISBN
9781610446792
Related ISBN
9780871546593
MARC Record
OCLC
908573169
Pages
242
Launched on MUSE
2016-01-01
Language
English
Open Access
No
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