MAIN IDEA:

The main idea of this book is to present results of author’s research on cooperation that was conducted using tournament of computer game based on prisoner’s dilemma. The result consistently demonstrated that the best strategy is always TIT-FOR-TAT starting with default cooperation. Author also presents brief overview of history of cooperation, its evolutionary significance, and provides recommendation on how to expand cooperation.

DETAILS:

I: IntroductionChapter 1: The Problem of Cooperation
Here author discusses the problem of cooperation: why would egoists cooperate without central authority that would force them to do this? Author bases his search for solution on analysis of prisoner’s dilemma as game:

Author also provides here the review of book’s content.

II: The Emergence of Cooperation
Chapter 2: The Success of Tit FOR Tat in Computer Tournament
This chapter explores the emergence of cooperation through the study of what is a good strategy to employ if confronted with an iterated Prisoner’s Dilemma. This exploration has been done in a novel way, with a computer tournament. Professional game theorists were invited to submit their favorite strategy, and each of these decision rules was paired off with each of the others to see which would do best overall. Amazingly enough, the winner was the simplest of all strategies submitted. This was TIT FOR TAT, the strategy which cooperates on the first move and then does whatever the other player did on the previous move. A second round of the tournament was conducted in which many more entries were submitted by amateurs and professionals alike, all of whom were aware of the results of the first round. The result was another victory for TIT FOR TAT! The analysis of the data from these tournaments reveals four properties which tend to make a decision rule successful: avoidance of unnecessary conflict by cooperating as long as the other player does, provocability in the face of an uncalled for defection by the other, forgiveness after responding to a provocation, and clarity of behavior so that the other player can adapt to your pattern of action. These results from the tournaments demonstrate that under suitable conditions, cooperation can indeed emerge in a world of egoists without central authority.

Chapter 3: The Chronology of Cooperation
To see just how widely these results apply, a theoretical approach is taken in chapter 3. A series of propositions are proved that not only demonstrate the requirements for the emergence of cooperation but also provide the chronological story of the evolution of cooperation. Here is the argument in a nutshell. The evolution of cooperation requires that individuals have a sufficiently large chance to meet again so that they have a stake in their future interaction. If this is true, cooperation can evolve in three stages. 1. The beginning of the story is that cooperation can get started even in a world of unconditional defection. The development cannot take place if it is tried only by scattered individuals who have virtually no chance to interact with each other. However, cooperation can evolve from small clusters of individuals who base their cooperation on reciprocity and have even a small proportion of their interactions with each other.

2. The middle of the story is that a strategy based on reciprocity can thrive in a world where many different kinds of strategies are being tried.

3. The end of the story is that cooperation, once established on the basis of reciprocity, can protect itself from invasion by less cooperative strategies. Thus, the gear wheels of social evolution have a ratchet.

III: Cooperation Without Friendship or Foresight
Chapter 4: The Live-and-Let-Live System in Trench Warfare ion WWI
Chapter 4 is devoted to the fascinating case of the “live and let live” system which emerged during the trench warfare of World War I. In the midst of this bitter conflict, the front-line soldiers often refrained from shooting to kill— provided their restraint was reciprocated by the soldiers on the other side. What made this mutual restraint possible was the static nature of trench warfare, where the same small units faced each other for extended periods of time. The soldiers of these opposing small units actually violated orders from their own high commands in order to achieve tacit cooperation with each other. A detailed look at this case shows that when the conditions are present for the emergence of cooperation, cooperation can get started and prove stable in situations which otherwise appear extraordinarily unpromising. In particular, the “live and let live” system demonstrates that friendship is hardly necessary for the development of cooperation. Under suitable conditions, cooperation based upon reciprocity can develop even between antagonists.

Chapter 5: The Evolution of Cooperation in Biological Systems
Chapter 5, written with evolutionary biologist William D. Hamilton, demonstrates that cooperation can emerge even without foresight. This is done by showing that Cooperation Theory can account for the patterns of behavior found in a wide range of biological systems, from bacteria to birds. Cooperation in biological systems can occur even when the participants are not related, and even when they are unable to appreciate the consequences of their own behavior. What makes this possible are the evolutionary mechanisms of genetics and survival of the fittest. An individual able to achieve a beneficial response from another is more likely to have offspring that survive and that continue the pattern of behavior which elicited beneficial responses from others. Thus, under suitable conditions, cooperation based upon reciprocity proves stable in the biological world. Potential applications are spelled out for specific aspects of territoriality, mating, and disease. The conclusion is that Darwin’s emphasis on individual advantage can, in fact, account for the presence of cooperation between individuals of the same or even different species. As long as the proper conditions are present, cooperation can get started, thrive, and prove stable. While foresight is not necessary for the evolution of cooperation, it can certainly be helpful.

IV: Advice for Participants and Reformers
Chapter 6: How to Choose Effectively
Chapter 6 spells out the implications of Cooperation Theory for anyone who is in a Prisoner’s Dilemma. From the participant’s point of view, the object is to do as well as possible, regardless of how well the other player does. Based upon the tournament results and the formal propositions, four simple suggestions are offered for individual choice:

1. Do not be envious of the other player’s success;
2. Do not be the first to defect;
3. Reciprocate both cooperation and defection;
4. Do not be too clever.

Understanding the perspective of a participant can also serve as the foundation for seeing what can be done to make it easier for cooperation to develop among egoists.

Chapter 7: How to Promote Cooperation
Chapter 7 takes the Olympian perspective of a reformer who wants to alter the very terms of the interactions so as to promote the emergence of cooperation. A wide variety of methods are considered, such as making the interactions between the players more durable and frequent, teaching the participants to care about each other, and teaching them to understand the value of reciprocity. This reformer’s perspective provides insights into a wide variety of topics, from the strength of bureaucracy to the difficulties of Gypsies, and from the morality of TIT FOR TAT to the art of writing treaties.

Here are author’s recommendations:

1. Enlarge the shadow of the future
2. Change the payoffs
3. Teach people to care for each other
4. Teach reciprocity
5. Improve recognition abilities

V: Conclusions
Chapter 8: The Social Structure of Cooperation
Chapter 8 extends the implications of Cooperation Theory into new domains. It shows how different kinds of social structure affect the way cooperation can develop. For example, people often relate to each other in ways that are influenced by observable features, such as sex, age, skin color, and style of dress. These cues can lead to social structures based on stereotyping and status hierarchies. As another example of social structure, the role of reputation is considered. The struggle to establish and maintain one’s reputation can be a major feature of intense conflicts. For example, the American government’s escalation of the war in Vietnam in 1965 was mainly due to its desire to deter other challenges to its interests by maintaining its reputation on the world stage. This chapter also considers a government’s concern for maintaining its reputation with its own citizens. To be effective, a government cannot enforce any standards it chooses but must elicit compliance from a majority of the governed. To do this requires setting the rules so that most of the governed find it profitable to obey most of the time. The implications of this approach are fundamental to the operation of authority, and are illustrated by the regulation of industrial pollution and the supervision of divorce settlements.

Chapter 9: The Robustness of Reciprocity

By the final chapter, the discussion has developed from the study of the emergence of cooperation among egoists without central authority to an analysis of what happens when people actually do care about each other and what happens when there is central authority. But the basic approach is always the same: seeing how individuals operate in their own interest reveals what happens to the whole group. This approach allows more than the understanding of the perspective of a single player. It also provides an appreciation of what it takes to promote the stability of mutual cooperation in a given setting. The most promising finding is that if the facts of Cooperation Theory are known by participants with foresight, the evolution of cooperation can be speeded up.

MY TAKE ON IT:

This classical book confirms once again my believe that the only reasonable behavior in interacting with other people is TIT-FOR-TAT despite its negative connotation as “eye for an eye”. However, the default to initial cooperation removes this negativity as long as other player uses the same strategy. Generally, author’s examples from real life confirm this finding, but a couple of important issues remain unresolved. The most important is probably the case when reciprocity is not possible, for instance because of lack of resources to use for this. Another one is complexity of the world, when players interact via multiple intermediaries who apply variety of strategies and the traceability of TIT-FOR-TAT is all but impossible. However, it is still very usable to have robust results for optimal strategy, however limited is its application in real life.  

MAIN IDEA:

The main idea of this book is to summarize and present author’s decades long research in psychology of lying and methods and tools to recognize lies and obtain truth. In order to do this author presents his Truth Default Theory (TDT) and provides wealth of experimental data supporting this theory. Author also reviews competing theories and ideas and supplies reasons why they do not work.

DETAILS:

PART I: THE SOCIAL SCIENCE OF DECEPTION
Chapter 1. The Science of Deception
This chapter starts with author recollection of listening book review of CIA agents on how they recognized lying. From this point he moves to discusses his qualifications as scientific researcher in just this area of psychology and how he came to this. He then present questions that such research supposed to answer:

1. What do people look for in order to distinguish between whether someone else is honest or lying?

2. What, if any, specific behaviors actually distinguish truthful communication from lies?

3. How accurate are people at distinguishing truths from lies?

4. Under what conditions are people more accurate or less accurate at lie detection, and what types of people, if any, are more skilled or less skilled lie detectors?

He also present results of previous research over decades that consistently shown human ability to recognize lies just slightly above random. Here is graph demonstrating these results:

Chapter 2. Cues

This chapter focuses on “cues.” Here is how author describes it:” We will take a close look at the research on:

(a) the behaviors that people think distinguish truths and lies,

(b) the behaviors that people actually rely on in distinguishing truths from lies,

(c) the behaviors that do and do not actually distinguish truths from lies.”

Here is the Summary:

What do people look for in order to distinguish whether someone else is honest or lying? People pay much attention to nonverbal behavior when assessing honesty and deceit. In terms of specific cues, there is a worldwide, cross-cultural consensus in the folk belief that liars avoid eye contact. But when behaviors that actually influence honesty assessments are analyzed, perceptions of plausibility, logical consistency, confidence, friendliness, and conversational involvement are quite important. What’s more, cues are not used in isolation, nor are they uncorrelated. Constellations of cues combine to create an honest or dishonest demeanor that guides people’s decisions about whether or not someone is honest. (There is more on this in chapter 13 when sender demeanor and the BQ [believability quotient] are discussed.)

What, if any, specific behaviors actually distinguish truthful communication from lies? The short answer is, not many. The only two cues that hold up consistently across various meta-analyses are that liars have larger pupils and higher pitch, on average, than honest senders. The differences are not large enough to have much practical use in lie detection. In general, there are few behavioral differences that distinguish truths from lies, and the differences that are there are not large, are inconsistent, and tend to diminish as scientific evidence accumulates.

Chapter 3. Deception Detection Accuracy
In this chapter author “examines people’s ability to distinguish truths from lies in traditional deception detection experiments. In both, priority is given to meta-analysis, looking at trends across larger numbers of studies rather than at the findings of individual studies. I strive to provide a coherent picture of what we know by focusing on findings that reliably replicate and by describing the big-picture implications of those results.”

This chapter answered two important questions:

How accurate are people at distinguishing truths from lies? People are slightly better than chance at distinguishing truths from lies in deception detection experiments. Accuracy is better than chance, but not by much. The across-study average is about 54% correct truth–lie discrimination.

Under what conditions (if any) are people more accurate or less accurate at lie detection, and what types of people (if any) are more skilled or less skilled lie detectors? The slightly-better-than-chance accuracy is remarkably robust and invariant. Some things make a difference of a few percentage points this way or that, but the slightly-better-than-chance holds across a wide range of conditions and methods. Besides answering these two critical questions, this chapter also highlights some important but underappreciated findings. One of these is the small standard errors in deception detection experiments involving multiple judgments per judge. The implication is that even small differences in raw accuracy can be statistically significant with ample effect sizes. Findings need to be understood in context. Second, the number of judgments strongly impacts the results, making unusual results based on small data untrustworthy. Third, raw accuracy (i.e., correct truth–lie discrimination) and accuracy for lies are not the same thing. The implication is that if people are better than chance at truth–lie discrimination, this does not mean that they are better than chance at recognizing lies per se. Finally, there is much more variability in senders than in judges. This suggests that viable explanations for findings need to account for both sender variability and judge constancy.

Chapter 4. Rivals
Here author describes competing theories that preceded his Truth Default Theory.

Author’s Summary: “This chapter provides a chronicle of prior theories of deception and deception detection. Ekman’s original leakage theory, Ekman’s updated perspective, four-factor theory, Bella DePaulo’s self-presentation perspective, Interpersonal Deception Theory, and Aldert Vrij’s cognitive load approach were each reviewed. I see much communality among Ekman, four-factor theory, IDT, and Vrij. In the next chapter, I offer the catchall idea of cue theories as a way to show the commonalities in the logic behind prominent deception theories and to show how theory has shaped research priorities and design. I offer a critical evaluation of these prior theories in specific, and cue theories in general. I hope it is obvious after this chapter why a new theory is so desperately needed.”

Chapter 5. Critiquing the Rivals
This is continuation of the previous chapter where author critiques rivals, their theories and then “provides a detailed rationale for the book and TDT. If prior theory were adequate and sufficient, there would be little to be gained from yet another theory. The case is made that prior theories have serious deficiencies and that the need for TDT is real and pressing.”

At the end of chapter author characterizes his rival as cults and summarizes them in such way:” Various camps of deception researchers have leaders who are revered by followers (e.g., Ekman, Burgoon, Vrij). The members of the various groups are very devoted to the system of beliefs that form the tenets of the various theories, and they see disagreement by outsiders over core issues as heresy. Each of the groups is relatively small in number, and each group sees the doctrines of rival theories as strange, sinister, and threatening. And, at least from my point of view, I think the admiration that the followers of the various theories have for their theories is both excessive and misplaced. Each of the rivals falls short in verisimilitude.”

PART II: TRUTH-DEFAULT THEORY
In this part author moves from critic of rivals to presentation of his Theory

Chapter 6. Truth-Default Theory Summarized
This chapter “provides a succinct and rough summary of TDT. Key definitions are provided. TDT is modular, by which author means that it is an organized collection of stand-alone mini-theories, hypotheses, and effects. Each of the modules is briefly described, and the propositional structure weaving them together laid out. But the chapter just provides an outline, with little explanation.”

TDT MODULES

TDT is a modular theory. The modules are various minitheories, models, effects, and hypotheses that can stand alone. They can be understood without reference to larger theory. Empirical support or disconfirmation for one module does not imply support or disconfirmation of another module. The modules discussed in the following chapters are:

• A Few Prolific Liars (or “outliars”; chapter 9)—The prevalence of lying is not normally or evenly distributed across the population. Instead, most people lie infrequently. Most people are honest most of time. There are a few people, however, who lie often. Most lies are told by a few prolific liars.

• Deception Motives (chapter 10)—People lie for a reason, but the motives behind truthful and deceptive communication are the same. When the truth is consistent with a person’s goals, he or she will almost always communicate honestly. Deception becomes probable when the truth makes honest communication difficult or inefficient. • The Projected Motive Model (chapter 10)—People know that others lie for a reason and are more likely to suspect deception when they think a person has a reason to lie.

• The Veracity Effect (chapter 12)—The honesty (i.e., veracity) of communication predicts whether the message will be judged correctly. Specifically, honest messages produce higher accuracy than lies. The veracity effect results from truth-bias.

• The Park–Levine Probability Model (chapter 12)—Because honest messages yield higher accuracy than lies (i.e., the veracity effect), the proportion of truths and lies (base-rates) affects accuracy. When people are truth-biased, as the proportion of honest messages increases, so does average detection accuracy. This relationship is linear and is predicted as the accuracy for truths times the proportion of messages that are true plus the accuracy for lies times the proportion of messages that are lies.

• A Few Transparent Liars (chapter 13)—The reason that accuracy in deception detection is above chance in most deception detection experiments is that some small proportion of the population are really bad liars who usually give themselves away. The reason accuracy is not higher is that most people are pretty good liars.

• Sender Honest Demeanor (chapter 13)—There are large individual differences in believability. Some people come off as honest. Other people are doubted more often. These differences in how honest different people seem to be are a function of a combination of eleven different behaviors and impressions that function together to create the BQ (believability quotient). Honest demeanor has little to do with actual honesty, and this explains poor accuracy in deception detection experiments.

• How People Really Detect Lies (chapter 14)—Outside the deception lab, in everyday life, most lies are detected after the fact, based on either confessions or the discovery of some evidence showing that what was said was false. Few lies are detected in real time based only on the passive observation of sender nonverbal behavior.

• Content in Context (chapter 14)—Understanding communication requires listening to what is said and taking that in context. Knowing about the context in which the communication occurs can help detect lies.

• Diagnostic Utility (chapter 14)—Some aspects of communication are more useful than others in detecting deception, and some aspects of communication can be misleading. Diagnostic utility involves prompting and using useful information while avoiding useless and misleading behaviors.

• Correspondence and Coherence (chapter 14)—Correspondence and coherence are two types of consistency information that may be used in deception detection. Correspondence has to do with comparing what is said to known facts and evidence. It is fact-checking. Coherence involves the logical consistency of communication. Generally speaking, correspondence is more useful than coherence in deception detection.

• Question Effects (chapter 14)—Question effects involve asking the right questions to yield diagnostically useful information that improves deception detection accuracy.

• Expert Questioning (chapter 14)—Expertise in deception detection is highly context dependent and involves knowing how to prompt diagnostically useful information rather than passively observing deception cues.

TDT Propositions

The TDT propositions provide a string of assertions, predictions, and conjectures that weave the constructs and modules together to describe and explain human deception and deception detection and to provide coherence. That is, the propositional structure shows how the various modules fit together. The propositions also provide specific, testable, and falsifiable predictions. The propositions are numbered one to fourteen and reflect the logical flow of TDT.

• Proposition one. Most communication by most people is honest most of the time. While deception can and does occur, in comparison to honest messages, deception is relatively infrequent, and outright lies are more infrequent still. In fact, deception must be infrequent to be effective.

• Proposition two. The prevalence of deception is not normally distributed across the population. Most lies are told by a few prolific liars.

• Proposition three. Most people believe most of what is said by most other people most of the time. That is, most people can be said to be truth-biased most of the time. Truth-bias results from, in part, a default cognitive state. The truth-default state is pervasive, but it is not an inescapable cognitive state. Truth-bias and the truth-default are adaptive both for the individual and for the species. They enable efficient communication.

• Proposition four. Because of proposition one, the presumption of honesty specified in proposition three is usually correct. Truth-bias, however, makes people vulnerable to occasional deception.

• Proposition five. Deception is purposive. Absent psychopathology, people lie for a reason. Deception, however, is usually not the ultimate goal, but instead a means to some other ends. That is, deception is typically tactical. Specifically, most people are honest unless the truth thwarts some desired goal or goals. The motives or desired goals achieved through communication are the same for honest and deceptive communications, and deception is reserved for situations where honesty would be ineffectual, inefficient, and/or counterproductive in goal attainment.

• Proposition six. People understand that others’ deception is usually purposive and are more likely to consider a message as potentially or actually deceptive under conditions where the truth may be inconsistent with a communicator’s desired outcomes. That is, people project motive states on others, and this affects suspicion and judgments of honesty and deceit.

• Proposition seven. The truth-default state requires a trigger event to abandon it. Trigger events include but are not limited to: (a) a projected motive for deception, (b) behavioral displays associated with dishonest demeanor, (c) a lack of coherence in message content, (d) a lack of correspondence between communication content and some knowledge of reality, or (e) information from a third party warning of potential deception.

• Proposition eight. If a trigger or set of triggers is sufficiently potent, a threshold is crossed, suspicion is generated, the truth-default is at least temporarily abandoned, the communication is scrutinized, and evidence is cognitively retrieved and/or sought to assess honesty–deceit.

• Proposition nine. Based on information of a variety of types, an evidentiary threshold may be crossed, and a message may be actively judged to be deceptive. The information used to assess honesty and deceit includes but is not limited to: (a) contextualized communication content and motive, (b) sender demeanor, (c) information from third parties, (d) communication coherence, and (e) correspondence information. If the evidentiary threshold for a lie judgment is not crossed, an individual may continue to harbor suspicion or revert to the truth-default. If exculpatory evidence emerges, active judgments of honesty are made.

• Proposition ten. Triggers and deception judgments need not occur at the time of the deception. Many deceptions are suspected and detected well after the fact.

• Proposition eleven. With the exception of a few transparent liars, deception is not accurately detected, at the time in which it occurs, through the passive observation of cues or sender demeanor. Honest-looking and deceptive-looking communication performances are largely independent of actual honesty and deceit for most people and hence usually do not provide diagnostically useful information. Consequently, demeanor-based deception detection is, on average, only slightly better than chance due to a few transparent liars, but typically not much above chance due to the fallible nature of demeanor-based judgments.

• Proposition twelve. In contrast, deception is most accurately detected through either (a) subsequent confession by the deceiver or (b) comparison of the contextualized communication content to some external evidence or preexisting knowledge.

• Proposition thirteen. Both confessions and diagnostically informative communication content can be produced by effective context-sensitive questioning of a potentially deceptive sender. Ill- conceived questioning, however, can backfire and produce below-chance accuracy.

• Proposition fourteen. Expertise in deception detection rests on knowing how to prompt diagnostically useful information, rather than on skill in the passive observation of sender behavior.

Chapter 7. Defining Deception (Beyond BFLs and Conscious Intent)
Chapter 7 takes a close look at issues in defining deception from the TDT perspective. Here is author’s definition of deception, lying, and honest communication:

• Deception is intentionally, knowingly, or purposefully misleading another person.

• A lie (or bald-faced lie, BFL for short) is a subtype of deception that involves outright falsehood, which is consciously known to be false by the teller, and is not signaled as false to the message recipient.

• Honest communication lacks deceptive purpose, intent, or awareness. Honest communication need not be fully accurate or true, or involve full disclosure.

Here author also looks at different types of deception such as self-deception, false statements, and failed deception attempts. He concludes: “An important implication is that message features like the truth and falsity of specific content, message intent, and message function or impact need to be distinguished because these things do not map perfectly onto one another. So, someone can say something that is objectively false, omit information, change the subject, and so forth, in a manner that is either intended to deceive or not. The objective truth or falsity of messages may or may not actually function as deception, and such messages may or may not be perceived as deception. In short, speaker intent, purpose, and message consequence in combination define deception, not the objective qualities of messages or information dimensions (discussed in the next chapter). Further, mere speaker intent is neither sufficient nor necessary in and of itself to define deception.”

Chapter 8. Information Manipulation (Beyond BFLs and Conscious Intent, P.2)
Beginning in chapter 8, a series of numbered original empirical studies are summarized testing relevant theoretical predictions. Author discusses in details Information Manipulation theory (IMT) and IMT2, providing review of several relevant studies.

Chapter 9. Prevalence
Chapter 9 explicates TDT’s first two propositions and the Few Prolific Liars module. The empirical support is detailed by reviewing multiple studies. Then author presents his interpretation: “TDT departs from most other theories of deception regarding the prevalence of deception. According to TDT, lying is infrequent relative to the truth. Lying is not normally distributed across the population but is instead highly skewed, with most lies coming from a few prolific liars. And, according to TDT, the frequency of lying matters in deception detection.”

Chapter 10. Deception Motives
In this chapter author examines motivation of people’s lying and delves into proposition five and the People Lie for a Reason module. It provides the first part of the answer to the mystery of accuracy in research that uses deception but is not about deception. Here are key TDT claims regarding motivation:

1. People lie for a reason. That is, deception is purposive. It is therefore not random.

2. Deception is usually not the ultimate goal but instead is a means to some other end or ends. That is, deception is typically tactical.

3. The motives behind truthful and deceptive communication are the same.

4. When the truth is consistent with a person’s goals, the person will almost always communicate honesty.

5. Deception becomes probable when the truth makes honest communication difficult or inefficient.

Then author provides experimental support of these claims.

Chapter 11. Truth-Bias and Truth-Default
Chapter 11 gets to the core of TDT, focusing on truth-bias and the truth-default and summarizing author’s research on them. The existence of the truth-default and the idea of triggers provide additional insight into the mystery of accuracy in research that uses deception but is not about deception. As before author discusses in details experimental results supporting his ideas.

Chapter 12. The Veracity Effect and Truth—Lie Base-Rates
Chapter 12 focuses on two important implications of truth-bias, namely, the veracity effect and the Park–Levine Probability Model. The focus is on the empirical evidence supporting these modules and proposition three. Chapter 12 explains why base-rates are so important. A very important here is that author provides clear falsification criteria and results of its experimental validation:

Chapter 13. Explaining Slightly -Better-than-Chance Accuracy
The focus in chapter 13 shifts to offering a coherent explanation for the prior detection-accuracy findings described in chapters 1 and 3. The companion modules A Few Transparent Liars and Sender Honest Demeanor are explicated, and the evidence consistent with proposition eleven is described. The mystery of normally distributed slightly-better-than-chance accuracy is solved. Here is a very important graphic representation of matched or unmatched demeanor and behavior, which somewhat confuse even professional interrogation experts:

Chapter 14. Improving Accuracy
Here author discusses the ways of improving accuracy. How People Really Detect Lies is described, along with the Content-in-Context, Question Effects, and Expertise modules. In the process, evidence for the twelfth, thirteenth, and fourteenth propositions is provided. Author reviews research documenting five paths to improved lie detection:

• Using evidence to establish ground truth and assessing the correspondence between communication content and ground truth.

• Using situational familiarity and contextualized communication content to assess plausibility.

• Using situational familiarity and contextualized communication content to assess motives for deception.

• Strategically questioning senders to elicit diagnostically useful communication content.

• Persuading liars to be honest and tell the truth.

Chapter 15. The TDT Perspective

This chapter wraps things up, restating key points of TDT and providing 5 keys to improvement in lie detection:

1. Correspondence of communication content with evidence

2. Content in context (situational familiarity)

3. Assessment of deception motives

4. Diagnostic questioning

5. Persuading honesty

MY TAKE ON IT:

This is the great book and I highly appreciate author’s scientific approach to his ideas and TDT’s experimental support. I guess it would allow to skip the whole lot of literature about truth finding via cues analysis. It also nicely demonstrates that I am not alone finding lie to be difficult even when necessary. The findings of this book are also very helpful in design of processes involving human action, making it clear that by removing advantages that could be provided by lying would remove motivation for doing this and consequently its occurrences.  

MAIN IDEA:

The main idea of this book it to present a different view on human action. Author expands usual assumption that people act rationally, trying to maximize material benefits or emotionally, based on instinctive heuristics, by introducing the new form of motivation for action, that he calls “for self”. Consequently, he supports this idea by reviewing various areas of human behavior that, he believes, are not covered by conventional views of motivation.

DETAILS:

PART I Life Is a Mixed Drink
1 Venturing beyond Purposeful Choice
Author starts here by rejecting the idea of exclusively purposeful choice: “Both rational choice and behavioral economics assume that action is purposeful, that people seek the outcomes that best gratify their preexisting desires. People either know their preferences and can describe them out loud, or sense them and act as if they understood what they wanted. The purposeful choice model can explain many things, but not everything. Certain actions are undertaken not for any tangible benefit but for their own sake. They cannot be ranked against, or traded for, other actions. These actions belong to a second realm of behavior that is neither rational nor irrational, but for-itself.”

Then he tells the story of his intellectual development from PhD candidate in Chicago school of economics with strong believe in economic rationality, to financial trading executive discovering joy of doings difficult projects for its own sake, and all the way through wealthy early retirement and post retirement projects when life’s enjoyment is not linked to specific material purposes.

2 Two Realms of Human Behavior
Here author moves to detail his main thesis discussing meaning of “For-Self” motivation and significance of Authenticity. He also reviews relationship between realms of “Purposeful” and “For-Self”, including their interactions and inequality when default is usually set to “Purposeful”. Author also provides graphic representation of his idea:

After that author proceeds to review in details all three parts of  “For-Self” domain, dedicating a Part of the book to each: believes, people, and time.

PART II Belief

3 Acting in Character
Here author discusses how people have infinite variety of believes and how they depend on individual character. He refers to philosopher Charles Sanders Peirce to discuss adoption of believes:

1. A new belief X is consistent with the things one already knows.
2. An authority to which one has committed says that X is so.
3. X is the style of thing that one is inclined to believe. In Peirce’s words, X is “agreeable to reason.”
4. A new belief X, when subjected to the scientific method, corresponds to data in the world.

After that author move to discuss consequences of acting based on believes, providing 2 interpretations for each one as Purposeful and another For-Self:

1. Disregarding Expert Opinion
2. Clinging to False Beliefs
3. Favoring Experiential Knowledge
4. Reacting to Extreme Unexpected Events

At the end of chapter author looks for practical implications in such area as stock picking.

4 Making Money in Financial Markets: Anatomy of a Leap
In this chapter author moves to area of his expertise – Financial Markets and first reviews Efficient Market Hypothesis, then two forms o investing: Institutional and Individual, and finally tells his individual business story with financing big and risky project Thanet.

5 For-itself Decision-Making within a Group
In this brief chapter author once again retells business story, this time with stress on reconciliation of his For-Self decision-making with other people, usually investors. Interestingly enough he even manages to link it to the Bible story of Joseph and Pharaoh.

PART III People
6 Altruism
Here author defines main categories of altruistic behavior and then looks in details at each one of them:

(1) selfish altruism, when an individual appears to subordinate his interests while actually promoting them;

(2) manners and ethics, when an individual observes social norms or adheres to established moral principles;

(3) care altruism, when one person cares directly about the well-being of another;

(4) mercy, when a person performs a sporadic altruistic act that defies rational explanation; and

(5) love altruism, which describes acts that transcend all preferences and do not stand in relation to them.

He also states that: “The purposeful choice model makes room for the first three types of altruism but not the last two.”

7 Public Policy
Author starts this chapter by applying Pareto efficiency to public policy. Then he moves to discuss moral dilemmas, including compulsory trolley problem and monetary value of human life.

PART IV Time
8 Changing Our Minds
This chapter is about choices across time, which includes planning and contradiction between current self that does planning and future self that suppose to implement it. Then author pontificate on planning horizon and discount of the futures.

9 Homo Economicus and Homo Ludens
The final chapter is about two different approaches: Homo Economicus and Homo Ludens, both of which drive human life. He also discusses freedom of choice, choice overload, need for meaningful challenges and consequently work. Finally, author suggest that economy should be changed to move away from Homo Economicus needs that becoming too easy to achieve in direction of Homo Ludens needs.

SUMMING UP Purposeful versus For-itself: A Peace Treaty

For summary author discusses behavior biases for rational choice or For-Itself, positive psychology, and provides updated graph of action drivers:

MY TAKE ON IT:

Generally, I am in agreement with author’s point that economics fail to explain human conditions and actions and there is need to go far beyond it to what author calls “for-itself”. However, I believe that it is not possible for human to do anything that could be strictly divided into “purposeful and for-itself”. It is because human is rather complex entity, which is continuously in process of changing condition of need to satisfy multiple, often contradictory needs and wants created by the brain’s evaluation of physical, psychological, and environmental conditions both: existing and preferable. The variance causes action to move from existing to preferable, which is one and only purpose of any action whether it purposeful, selfish, altruistic, or whatever.  I wholeheartedly support all attempt to understand humans, but I am against all attempts to control them as long as they are not violent. My believe is that humans are best off if they are not controllable by others and have resources to achieve whatever they want to achieve.

 

MAIN IDEA:

Here is how author defines the main idea of this book:” A key proposition of this book is that economic fluctuations are substantially driven by contagion of oversimplified and easily transmitted variants of economic narratives. These ideas color people’s loose thinking and actions. As with disease epidemics, not everyone becomes infected. In the case of narrative epidemics, the people who miss the epidemic may tell you that there was no such important popular narrative.”

DETAILS:

Part I The Beginnings of Narrative Economics
Chapter 1 The Bitcoin Narratives
Author starts it with the statement that he presents a new theory of economic change that introduces new element: contagious popular stories as important factor defining economic behavior. In this chapter he presents example of such narrative: Bitcoin and then discusses its relation to bubbles, its philosophical link to Anarchism, elimination of inequality, and globalization via removing nation-state control over money supply.

Chapter 2 An Adventure in Consilience
In this chapter author looks at consilience as unity of knowledge and presents his idea that it could be build on the basis of narratives. To support this idea, he presents search results in publications from different areas of knowledge:

Chapter 3 Contagion, Constellations, and Confluence
Here author states that economic narratives are pretty much similar to viruses and then looks at processes of contagion. Once again, he uses Bitcoin as example, comparing it with previous popular economic narrative of Bimetallism:

He also discusses how multiple economic narratives interact and intertwine between themselves, creating environment that drives econonic events in one direction or another.

Chapter 4 Why Do Some Narratives Go Viral?
Here author looks at why narratives are so important and why anthropologists find them in all human societies, regardless of their levels of development. He also looks at the nature of narratives, discussing difference between story and narrative and then providing example with invention that had significant impact on economy – rolling suitcase and how it could not become viable for about 100 years after it was patented in 1887. It took glamourous aircrews of big airlines start using rolling suitcases for them going viral and becoming ubiquitous.

Chapter 5 The Laffer Curve and Rubik’s Cube Go Viral
In this chapter author looks at another two viral phenomenon, one economic -Laffer Curve, and another just toy – Rubik’s cube. Here is diagram of popularity search for Laffer:

Chapter 6 Diverse Evidence on the Virality of Economic Narratives
Author starts this chapter by looking at underlying physiology of human brain related to stories and narratives. He then refers to philosophical writings to provide additional evidence that “going viral” is not a new thing, but rather natural condition of human existence that was around forever. Finally, he links it to various examples of impact of narratives on human behavior, including economic behavior. He also discusses heuristics that often define human behavior without any regard to formal logic and even, quite often, completely denying it.

Part II. The Foundations of Narrative Economics
Chapter 7 Causality and Constellations
Author starts this with note that just a few persons create new economic narrative and consequently cause big economic movement only if and when this narrative becomes accepted by many. Then author discusses direction of causality taking for example Friedman’s “Monetary history” and then reviewing the idea of “self-fulfilling prophecy”. Next stop is discussion of impact of random events on narrative including such events as anniversaries. Author also describes a number of experiments when intentional prompting caused change in behavior. The final part of the chapter is discussion of memory and impact of fake news that could cause real change of events.

Chapter 8 Seven Propositions of Narrative Economics
In this chapter author summarizes 7 propositions of narrative economics:

1. Epidemics can be fast or slow, big or small. The timetable and magnitude of epidemics can vary widely.
2. Important economic narratives may comprise a very small percentage of popular talk.
3. Narratives may be rarely heard and still economically important. Narrative constellations have more impact than any one narrative. Constellations matter.
4. The economic impact of narratives may change through time. Changing details matter as narratives evolve over time. Truth is not enough to stop false narratives.
5. Truth matters, but only if it is in-your-face obvious.
6. Contagion of economic narratives builds on opportunities for repetition. Reinforcement matters.
7. Economic narratives thrive on human interest, identity, and patriotism. Human interest, identity, and patriotism matter.

Part III Perennial Economic Narratives
Chapter 9 Recurrence and Mutation
This chapter is about complex live of economic narratives, how they are created at some point and then move with time, sometimes moving into economic live and them disappearing in shadows, only later mutate and move back to live again. He provides a list of the biggest economic events in American history:

• A depression from 1857 to 1859, followed by the secession of southern states in 1860–61 and the US Civil War (1861–65). The Civil War was the most lethal war in US history, responsible for more US fatalities than all other US wars combined.
• A depression from 1873 to 1879 that led to the publication of the best-selling economics book of all time in the United States, Henry George’s Progress and Poverty (1879), which accused the unrestrained free-market system of producing worsening inequality.
• A depression in the 1890s comprising two NBER contractions, 1893–94 and 1895–97. The extended depression, during which unemployment always exceeded 8%, ran from 1893 to 1899. This depression coincided with an aggressive phase in US history, with the United States launching the Spanish-American War and the Philippine War.
• A series of three short contractions from 1907 to 1914, starting with the Panic of 1907, which ended only with the heroic advances made by J. P. Morgan and other bankers. These events led to the creation of the Federal Reserve System to prevent such banking crises in the future. These contractions were followed by World War I, which began in 1914.
• A brief but extreme depression from 1920 to 1921 that included the sharpest deflation ever experienced in the United States.
• The Great Depression after the 1929 stock market crash, which morphed into a worldwide depression. In the United States the extended depression ran from 1930 to 1941, with unemployment uniformly exceeding 8%. The Great Depression took its name from the 1934 Lionel Robbins book with that title. It comprised two NBER contractions, 1929–33 and 1937–38. The worldwide depression immediately preceded World War II.
• A severe recession in 1973–75, associated with a war in the Middle East and an oil embargo. Economist Otto Eckstein called this period the “Great Recession” in his 1978 book with that title, inviting comparison with the Great Depression. z
• A severe recession from 1980 to 1982, comprising two NBER contractions, a short contraction within the year 1980 and, soon after, another contraction 1981–82, associated with a war in the Middle East. At the time, this recession was called the “Great Recession,” again inviting comparisons with the Great Depression.
• A severe recession from 2007 to 2009, also named the “Great Recession,” once again inviting comparisons with the Great Depression, and this time the name really went viral and has stuck to this day.

At the end of chapter author identifies 9 specific narratives that he specifically reviews in the next 9 chapters.

Chapter 10 Panic versus Confidence
Here author analyzes raise and fall of panic or levels of confidence using search for frequency of use words in contemporary publications:

He then discusses crowd psychology which causes these movements and how they impact economy.

Chapter 11 Frugality versus Conspicuous Consumption
Here author discusses another somewhat polar narratives: frugality and need for saving that was prevalent before WWII and how it was substituted by the new narrative of “’American Dream” after WWII:

Chapter 12 The Gold Standard versus Bimetallism
This chapter is about another pair of narratives, this time related to intrinsic value of money, which had 2 picks: one at the end of XIX century with “Cross of Gold” images and later narratives of XX century with Gold Standard as tool to limit government monetary excesses:

Chapter 15 Real Estate Booms and Busts; Chapter 16 Stock Market Bubbles; Chapter 17 Boycotts, Profiteers, and Evil Business; Chapter 18 The Wage-Price Spiral and Evil Labor Unions;
These all are other long-living narratives, which author traces in similar ways through use of relative frequency of words in news and magazines. They all have intermediate ups and down when a narrative used to explain current events and then fades out when events change and some other narrative takes its place.

Part IV Advancing Narrative Economics
Chapter 19 Future Narratives Future Research
Here author discusses future and makes a number of important points about changes in future forms and circumstances of various narratives and anticipation of new technology changing contagion rates and recovery rates of future narratives. At the end he suggests how his approach should be used in future research and how incorporate narrative economics into general economic theory. He also suggests the great expansion of data collection efforts necessary for application of his ideas and specifies how it could be done:

1. Regular focused interviews of respondents inviting them to talk expansively and tell stories in response to stimulus questions related to their economic decisions.
2. Regular focus groups with members of different socioeconomic groups to elicit actual conversations about economic narratives.
3. A historical database of focus groups conducted for other purposes in years past.
4. Databases of sermons.
5. Historical databases of personal letters and diaries, digitized and searchable.

 Finally author suggests to conduct tracking and quantifying narratives in order “to better understanding the patterns of human thinking about the forces that cause economies to boom at times and to stagnate at others, to go through creative times and backward times, to go through phases of compassion and phases of conspicuous consumption and self-promotion, to experience periods of rapid progress and periods of regression.”

MY TAKE ON IT:

I find this book very interesting and I think that author’s approach would be much more effective than quantitative approach to economics that dominated the last 60 years of this field development, consistently providing proves of its inability to predict future developments even for the next couple of quarters. Interestingly enough, this approach somewhat reminds me of Mises’ believe that economics is about human actions and as such is not really good place for mathematical approach based on analysis of global equilibrium and computer modeling. However, it would take tremendous change in thinking of economists on tenure that I do not think could possibly happen, unless tenure is substituted by rewards for correct predictions of future economic developments.

 

MAIN IDEA:

The main idea of this book is that individual IQ scores have only marginal impact on individual prosperity, but IQ of a nation or hive, defined as average of its people, is much more important because it defines overall prosperity of the nation.

DETAILS:

Introduction: Paradox of IQ

The paradox author presents here is that countries which do better on various international scholastic tests have higher GDP, however inside countries high IQ does not correlate with high income at the same level. Here is how author summarizes reasons for this:

Author identifies 5 channels for IQ to pay more for nations than for individuals:

“1. High-scoring people tend to save more, and some of that savings stays in their home country. More savings mean more machines, more computers, more technology to work with, which helps make everyone in the nation more productive.

2. High-scoring groups tend to be more cooperative. And cooperation is a key ingredient for building higher-quality governments and more productive businesses.
3. High-scoring groups are more likely to support market-oriented policies, a key to national prosperity. People who do well on standardized tests also tend to be better at remembering information, and informed voters are an important ingredient for good government.
4. High-scoring groups will tend to be more successful at using highly productive team-based technology. With these “weakest link” technologies, one misstep can destroy the product’s value, so getting high-quality workers together is crucial. Think about computer chips, summer blockbuster films, corporate mega-mergers.
5. The human tendency to conform, at least a little, creates a fifth channel that multiplies the effect of the other four: the imitation channel, the peer effect channel. Even a small tendency to conform, to act just a little bit like those around us, to try to fit in, tends to quietly shape our behavior. If you have cooperative, patient, well-informed neighbors, that probably makes you a bit more cooperative, patient, and well-informed.”
6. Just a Test Score?

Here author looks at IQ tests as tool for intelligence measurement and points out that high scores in one area predicts skills in other. Then he discusses diverse methods of measuring cognitive skills and provides some research result for impact:” The payoff to a high IQ appears moderate. Those with IQs in the top 10 percent earned about 60 percent more than those in the bottom 10 percent.” Another research demonstrates that this impact did not change that much for 100 years. Finally, author discusses Emotional IQ noting that:” Better average social skills are typically just another benefit of having a higher IQ score, and since the economy is a social system, those social skills may prove important in explaining why higher-scoring nations tend to be more productive.”

2. A da Vinci Effect for Nations

Here author extends the idea if consistent levels of IQ across different areas to Nations. First, he discusses ecological validity of tests. Then author moves to discuss main source of nations IQ – work of psychologist Richard Lynn and political scientist Tatu Vanhanen. Here is relevant graph:

3. James Flynn and the Quest to Raise Global IQ
   This chapter is about Flynn effect of IQ raising over time. Author discusses racial implications, politically correct suppression of research, impact of nutrition, health, education, and surrounding people on IQ not only of individuals, but also groups and nations.
4. Will the Intelligent Inherit the Earth?
   Here author moves to various experiments with delayed gratification and idea that smarter people are more patient. Author reviews various research results and financial results for savings rates and debts.
5. Smarter Groups Are More Cooperative
   This chapter looks at another very important area of human activity: cooperation. Once again research demonstrates correlation: smarter people are not only more patient, but are also better at mind reading to predict results of cooperation or lack thereof. To analyze this at the group level author looks at data from schools with high average SAT scores adn low, finding that students in former are more cooperative than in latter.
6. Patience and Cooperation as Ingredients for Good Politics
   Author starts this chapter with discussion of cooperation, providing example of informal truce during WWI. Then he moves to politics defining it as kind of recurring prisoners dilemma and linking it to institutions: “I contend that economic institutions—property rights, legal systems, political regimes—are often a collection of just the kinds of games for which higher average IQ pays off, games that are played day in and day out by judges, bureaucrats, politicians, and citizens.” . Author then brings in Coase Theorem: “If it’s easy for two or more parties to bargain with each other, they can bargain to an efficient, win-win outcome regardless of which party has the most power going in to the negotiation.” The final part of the chapter is about government and corruption as measured by the corruption perception index. Author makes an interesting point about IQ and corruption: “Average IQ predicts lower corruption across countries. Additional research that Potrafke and I collaborated on showed that both national average IQ and national math and science test scores do a robust job of predicting a nation’s degree of overall property rights enforcement.14 And University of Johannesburg economist Isaac Kalonda Kanyama found a moderate to strong relationship between national average IQ and yet another set of institutional quality indices created by the World Bank.15 In nations with higher average test scores, politicians tend to respect people’s property, government bureaucracies allow people and businesses to buy and sell with less interference, and bribery is less a part of daily life. In nations with higher average test scores, the government is more likely to let people and businesses find their Coasian bargains peacefully.”
7. Informed Voters and the Question of Epistocracy
   This chapter starts with example of gap between experts and population using issue of dosage. Then he moves to discuss uninformed voters as result of low numeracy and literacy of population. It is linked to IQ with high IQ voters being better informed, more active, and generally having different attitudes, usually more pro-market. Author also discusses here formation of political opinion via social pressure and information manipulation. On Epistocracy author brings in a paradox of democracy: expansion of franchise brings in low IQ masses that vote incorrectly from the point of view of high IQ elite. He ends with this: “As an economist I will make this forecast: if a nation can find an effective way to raise the information level of its voters, it will probably become more market-oriented, more socially tolerant, and more prosperous in the long run.”
8. The O-Ring Theory of Teams
   O-ring is reference to the piece of Shuttle equipment that failed causing catastrophe. Author uses this example to discuss that any system is as reliable as its least reliable subsystem. Author then expands this analogy to teams with good and bad workers and posits the question: If high IQ team is more productive, why individual IQ does not provide higher returns.
9. The Endless Quest for Substitutes and the Economic Benefits of Immigration
   Here author provides his solution to paradox: in high average IQ team even low IQ individuals much more productive than they would be on low average IQ team. This become foundation of author’s discussion on immigration. His claim is that low IQ and culturally different immigrants are becoming much more productive in high IQ team, consequently benefiting everybody. He then discusses impact of such immigration including on the political system of the new country.
10. Poem and Conclusion
    In the last chapter author become a bit poetic. Then he refers to research about top 5-10% of population with higher level of cognitive skills and whether they have disproportional impact on prosperity of the nation overall. The final inference is that individual IQ does not matter as much as overall levels of cognitive abilities and skills and politics should be directed to support their development. Author also expresses hope that Flynn effect would have global impact raising prosperity of currently lower-scoring countries.

MY TAKE ON IT:

I think that author’s attention and concentration on average IQ of the nation is somewhat strange because it does not exist. As many other thing that social “science” attempts to analyze, it is just an abstraction. IQ and other characteristics are characteristic of individual humans and sould not be applied to abstraction because it prevents clear analysis. What does matter is culture, expressed as a set of views and opinions in minds of majority of people regardless of their IQ. Average American regardless of IQ is culturally conditioned to believe that he/she is entitled to freedom of action in hope to obtain good returns if this action successful in satisfying needs of others who would pay. Whoever is the leader of the nation at the moment can help or hamper to this action, but not really define outcome. The flow of wealth is going from the bottom up with most of it supposed to stay at the bottom. Average Russian, also regardless of IQ, culturally conditioned to believe that decisive impact on his/her well being comes from whoever is the great leader, who now makes decisions and directs collective effort in creation of wealth, which them distributed down according to individuals’ position in society. Consequently, individual effort should be directed to improvement of position within society rather than to creation of wealth. IQ, either individual or national, hardly has much impact on wealth creation by overall society in either case.

 

Actually, table of cognitive abilities and IQ results by country nicely demonstrates my point. Both CA and IQ of Ukraine and Israel are exactly the same 93 and 95. Moreover the population of Israel to high extent came from Ukraine between 1880 and 2000, the last wave (10% of Israel population) coming after 1990. Israel’s GDP per capita is $42,452, while Ukraine $2,536, that is nearly 20 times difference. It is all despite Ukraine having large territory with the best agricultural land in the Europe, close to the rich EU countries, and vast industrial base built during Russian Empire and expanded by USSR. It is also mainly at peace, except for low scale conflict with Russia, which does not threaten its existence. Israel has miniature territory, is surrounded by enemies who seek its complete destruction and annihilation of its population, constantly suffers from terrorist attacks, constantly under political attack from United Nations, constantly under attack from anti-Semitic intelligentsia of nearly all countries. And, since national CA or IQ cannot explain this different in performance, something else should. Whether such explanation would be based on high individual IQ of Ashkenazi Jews that represent some 25% of population, or overall mix of Jewish cultures from all around the world that formed Israeli culture, or quality of air and water, it would be an interesting thing to explore.