Posted by: gavinstokes | February 15, 2011

Class notes


Video:Paul Seabright,  The Company of strangers.

Opens with a discussion on how we resemble our close cousins chimpanzees, form a social perspective. Using an image of market he shows how we can deduct what is going on in an image and explain how we know this. Our social primate brian allows us to make assumptions about social situations.

Our modern world is built on exchanges between complete strangers, from the coffee we drink to the papers we read, its a very dynamic web of collaboration. People collaborate more than we realise.

Our stone age brain says strangers are lethal to us, how did we overcome it. The book deals with this topic, the limatations of our reasoning and natural selection and how it relates to the crisis today.

Collaboration requires trust, we apply this trust when purchasing goods, so how do we know who to trust. Our psychology of trust relies on face to face interactions, in todays world we change this to a trust in institutions.

Gary Gorton says “A banking system works for Joe bloggs in the same way the electricity grid works”. We don’t have to ask questions about risk with systems such as this. This can make these systems vulnerable to the morons we know realise have been running them.

Is the 20th century the most violent century so far, is there more risk of danger. 4% of all deaths where caused by violence compared to the hunter gatherer society which was 14%. Back then strangers where deadly. Compared to today violence has steadily declined since the middle ages, why is this.

The civilising process, there has been a growing influence of civilising institutions, law, police, army etc. Emtional control has also spread. Another view says that violence has been edged out as it has become a harnessed emotion, also many of the skills for cooperation are adapted emotional parts of our brain. We as species are good calculators and realise violence is not in out interest. We realise we need to cooperate.

How did this happen, natural selection has economised on parts of our brian, setting up cognitive short cuts, i.e being able to read a face. But circumstances today are different. We navigate todays networks of trust using our stone age brains. We made 3 keys mistakes that led to the financial crisis, which are derived form the 1930s.

In 1930s the view arose that most banks would be fine if panic was avoided, this was wrong as we have seen with todays banks.

1930s, It’s the small investors that go under first, again not true, Lehman Brothers.

Banking system needs its confidence sustained, again a mistake???.

The problem is we are at our weakest when the brain is at its best, we are very good at strategic reasoning as group. When everyone is patting themselves on the pack we fool ourselves as a group.

Trust will more than likely be an exam question, challenges, problems, solutions.


How does online trust work, with wikipedia editing the amount an item has been editied can be depicted by higliting edit text with a deeper shade of red the more its been edited.

Online trust is built on a type of ranking, take Googles page rank. The social web has deal with relability of people submitting content.

One model breaks online trust into, Relationship, Repuation, Process driven.

Ebay users get marked on transactions, provide tool to do this, repuations a re hard to achieve and are valued.

Transparnecy, consitient behaviours

Porcess base
Improve system

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