Wednesday, December 31, 2008

The Rational and Irrational

The last two weeks I've been in the midst of a move, soon to take on the mantle of Dean [edit: I'll be Dean of Academic Support services, including responsibility for the library, IT, IR, faculty professional development, and service learning] at a small urban HBCU. I've gotten to enjoy the three things I enjoy least: moving, painting, and plumbing. The biggest moving challenge was around 200 boxes of books, half taken from the lovely library (pic) I built only a few years ago. The contractor hasn't been returning my calls, so it may be a while before the new one is built.

I've tried twice now to get a new driver's license, but the DMVs were full to bursting, and I'll have to get there first thing in the morning or else spend the day waiting apparently. I always keep a book handy for such occasions. It used to be A History of Western Philosophy by Bertrand Russell--the only such history I've enjoyed reading. Now I keep The Prince by Nicolo Machiavelli in the car. Both can be browsed easily. Lately I've been toting around a book I found while unpacking, called The Evolution of Cooperation by Robert Axelrod (wiki). I had bought it years ago when I did a session for high school counselors during a seminar on ethics. Most of the other sessions were touchy-feely. Mine addressed cold war strategies and TIT FOR TAT, a game theory strategy that Axelrod makes much of. I recommend the book, and while you're at it, The Selfish Gene (wiki) by Richard Dawkins, which addresses game theory in the context of biological evolution.

The argument is made that in relationships with others, the most robust (or at least one very robust) strategy is to have a short memory about past interactions, and to reciprocate immediately both cooperation and betrayal (called defection in the book). In terms of the workplace, this could be something as simple as being honest with co-workers. [aside: I always put the hyphen in co-worker, because otherwise it might be interpretted as cow-orker. I'm not sure what that is, but I wouldn't want to be one!] If initial trust is reciprocated, then the relationship works to the advantage of both parties. On the other hand, if someone is less than honest, TIT FOR TAT would have you reciprocate. In this case, probably not by returning the same behavior, as that would ultimately be self-defeating, but by exposing the behavior or otherwise addressing it head-on. One of Axlrod's main points is that reciprocity of negative acts can 'echo' in destructive cycles. Think of acts of ethnic-based violence, for example. He gives insightful examples of life in the trenches of WW I, where opposing units would often come to implicit terms of temporary truce. Violations of the truce were dealt with immediately and harshly.

One of the most interesting results from game theory is that in short-term relationships, the rational strategy is to betray (or defect). Only in circumstances where you will interact for an indefinite number of times with others does cooperation make rational sense. In human societies, this is ameliorated by the fact that our reputations follow us. But witness the behavior of people who are anonymous (as on Internet message boards) to see evidence of the unfettered behavior emerging.

Another book, this one on my Amazon wish list, is Predictably Irrational by
Dan Ariely. I found an outline of it here that summarizes the main points. There are several bits here that are of interest to marketing higher education. These have to do with price and perception. The first is the power of comparison. An example is given of a bread-maker that wouldn't sell until the manufacturer came out with a 'deluxe' model, which made the basic model seem like a bargain. At the same time, higher prices are associated (arbitrarily, it seems) with more value. One institution I consulted for raised its tuition dramatically over three years just to be in the same league as the ones it aspired to be. That is, the increases were not financially motivated, but for marketing purposes.

The second chapter--on anchoring--has some powerful lessons for marketing higher ed, I think. Again, the theme is perception becomes reality. Black pearls are worthless until they're stuck in a pricey display window with a ridiculously high number on the tag. Since perceptions of prices in higher education are already high, the strategy would be driven by competition locally or within a niche. The lesson of Starbucks (given as an example) is to create something that's the same but looks new--to create new expecatations of price and experience. If there's a recurring theme, it's that perception drives experienced reality.

Finally (for this post), there's the idea that 'free' is often overpriced. That is, people often value something that's putatively free disproportionately over merely cheap.'s free shipping is an example of a success story. Free online applications to college (waiving the normal fee) could be another. At my new university, students get a 'free' laptop--never mind that they pay a hefty technology fee. It makes me wonder what else we could package that way...

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