business career entrepreneur success

Real-World Cooperation and Changes in Business Behavior

Real-world cooperation for success often involves interactions among one or more people and groups. When the trust game is expanded so that people aren’t interacting with a single partner, but with someone randomly chosen from a group there is a notable change in people’s behavior. But, how can an entrepreneur benefit from this with success?

Signals, norms and enforcement for business and career success

In one experiment there was a group of business investors and another group of trustees. When a given trustee received an investment their repayment could go to any of the investors, not necessarily the one who initially invested. In this situation the rate of reciprocation drops dramatically, people no longer expect others to behave fairly since there is no ability to keep track of his actions people can’t build up a trustworthy reputation with success.

If interactions are just random in business and career and anonymous people can’t send signals that they are trustworthy, and if you are a solo-entrepreneur you know what I mean, nor send signals that disapprove of others behavior. So, if trust so easily breaks down when groups interact in the laboratory what leads to cooperative behavior in the real world, in a business or for an entrepreneur? Over the remainder of this article I’ll consider three types of explanations: signals, norms and enforcement.

When people interact in social settings their action send signals about their intentions. We can send signals in many ways: your body language, her tone of voice, how we move toward or away from someone. We’ve all been reassured by someone smile or put off by someone’s crossed arms and harsh tone of voice. When people interact with success in laboratory games though, the researchers don’t necessarily want to allow all of those were realistic signals happen. They are are just too complex to easily characterize.

Instead, people need to send signals through their actions in the game, whether their business like decision signal an intent to cooperate or to compete. In a clever study, a team of economists and neuroscientists brought to people to the laboratory to play the trust game against each other, but in a twist the two players each went into their own MRI scanner and the two scanners were synchronized so that images of both players brains were collected simultaneously while the players play the game 10 times in a row with each other.

Cooperation in business and career is rewarding

The researchers found that when players interact in a benevolent way such as when a player increases the amount they sent to their opponent from one game to the next there was increased activation in the brain region called the nucleus accumbent that the same region you’ve maybe heard before. It’s one of the major targets for the dopamine neurons that guide how we learn about reward. What’s even more interesting was how this brain activation changes as the two players develop trust.

In the first few games the brain activation occurs relatively late in each game, after the investor makes an investment that shows trust, but as the two players start to trust each other more and more the activation in this brain region moves earlier in the game it now anticipates the investor signal that they’re willing to trust. Cooperation is rewarding and as we develop trust that sense of reward is not only present following cooperative acts, but also when we first receive a signal of cooperation. Signaling is clearly important for cooperation but it can’t explain the variety of real-world cooperation that people show.

We often cooperate in business and career with people we’ve never met even before we received any signals from and we do that because of what are called social norms, generally accepted rules about how we should behave. Is notoriously difficult to identify why particular social norms exist. For any social norms, say wearing formal close to a job interview, explanations can come from psychology, sociology, economics, anthropology or even evolutionary biology, but economists and psychologists generally advanced three explanations for the social norm of cooperation.

The first explanation is simple. We cooperate because of a sense of altruism – we want to help our social partners, but altruism doesn’t get us very far as an entrepreneur as I discussed in the previous article. Altruism only works with success in very limited business circumstances: when we value a public good, when our sacrifice is relatively insignificant and when there are competing sources for support. Those conditions don’t really apply to social cooperation. Impure altruism assumes that we have an internal feeling, a warm glow that motivates us to help others succeed.

That’s consistent with a sense of reward that we get from interacting with a specific business partner, but it doesn’t explain why we have social norms that encourage cooperation. So we’ll put altruism aside as a potential explanation. A second explanation is that up in the inequality diversion – people dislike it when what they received differs from what someone else receives. But, that’s a different story for a different article.