Unlike the self-interested Homo economicus of classical economics, real-world humans exhibit altruistic behavior in repeated situations. The reciprocity hypothesis explains that these altruistic acts are actually self-interested acts done for long-term benefit, and it plays an important role in understanding the complexity of human behavior and the diversity of motivations.
Classical economics assumes that all humans are self-interested. This is called homo economicus, a term you’ve probably heard a lot. Homo economicus is characterized by a complete lack of emotion and an insatiable desire for material things. This humanoid was instrumental in the creation of classical economics, but it has many problems. This is because real humans behave quite differently from Homo economicus! Homo economicus is endlessly selfish and doesn’t want to lose a single cent. However, there are people in our lives who are selfless and do things for others, even if it means losing a little bit of money. Why are humans so different from Homo economicus?
The assumptions of classical economics were shaped by economic changes during the Industrial Revolution. During this time, the efficiency of markets and the optimal allocation of resources became important issues, so it was necessary to simplify human behavior to construct economic models. However, over time, it became clear that human behavior is not solely driven by economic interests. The concept of homo economicus came under increasing criticism as it was discovered that social and psychological factors have a strong influence on economic decisions.
The reciprocity hypothesis provides a good explanation for why humans exhibit altruistic behavior. This hypothesis states that human altruistic behavior in repeated situations is only superficially altruistic, but is actually selfish behavior that maximizes one’s own benefit. In a one-time situation, self-interested behavior can ensure greater benefit than altruistic behavior, which involves helping others at one’s own expense (loss). But what if the situation is repeated? It’s possible that mutually beneficial behavior may be more profitable in the long run. This is known as a repetition of the prisoner’s dilemma game. What seems altruistic in the short term is actually a strategy that maximizes long-term profit.
For example, let’s say there’s a restaurant in a tourist destination and two people, A and B. A is a local resident, and B is a tourist visiting the tourist destination. If A and B were visiting the restaurant for the first time, who would the owner of Mamna be more likely to serve? In a typical situation, the owner would be more likely to serve A, who is a local resident. This is because B only affects the restaurant’s revenue once, whereas A can affect future revenue many times over. In other words, if A’s satisfaction with the restaurant increases, the restaurant’s “tastiness” will pay off in the long run. In other words, if A’s satisfaction with the restaurant increases, the owner of the restaurant can be assured of better service in the long run. If A becomes a regular customer of the restaurant and the owner’s revenue increases, A can be assured of better service in the long run. Here, both the restaurant owner and A seem to be acting altruistically by increasing the other’s profits at their own expense, but in fact, they are simply adopting a strategy to increase their own profits in repeated situations. In other words, they are demonstrating altruism by the reciprocity hypothesis.
The reciprocity hypothesis views human altruism not as “true altruism” but as “hidden self-interest”. This means that humans are acting in their own long-term self-interest, but they are not truly helping others through noble sacrifice. Was the owner of the restaurant, Mr. Tastna, being nice to A in the spirit of noble sacrifice? Does A also give up going to other restaurants and become a regular customer of the restaurant out of pure altruism towards the owner? No. The reciprocal reciprocity hypothesis suggests that this is not the case. According to the reciprocity hypothesis, they are simply acting to maximize their own long-term interests.
As such, the reciprocity hypothesis is a good explanation for human altruistic behavior. People actually experience more repeated situations than one-offs. The significance of the reciprocity hypothesis is that it explains why and how human altruism emerges in these real-world situations. The hypothesis also has humanistic significance because it allows us to understand the true intentions behind people’s altruistic behavior. Of course, the reciprocity hypothesis doesn’t explain all human altruism (that’s why it’s a hypothesis). An example is people who donate money to feed starving children in Africa. The donor does not expect to gain long-term benefits from the children. This behavior is easily observed in society, but it is not easily explained by the reciprocity hypothesis, which states that people are ostensibly altruistic because they consider their own interests. This is explained by other hypotheses, such as the costly signaling hypothesis and the reciprocal human hypothesis. However, despite these blind spots, the reciprocity hypothesis is valuable because it still captures the essence of many altruistic behaviors.
Despite its limitations, the reciprocity hypothesis still plays an important role in modern economics and psychology. It shows that human behavior is not simply determined by economic calculations, but is also the result of social interactions, trust, and long-term relationships. As such, it helps us understand the complexity of many human behaviors we encounter in our daily lives. It also suggests that when designing economic policies, we should consider human altruistic behavior. For example, in issues like providing public goods or protecting the environment, the reciprocity hypothesis can be applied to explore how people can work together to achieve better outcomes.
