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Rock-paper-scissors theory of group dynamics

Achievement/Results

Birds flock, fish school, and even human beings get swept up in fads, panics, and other herd-like behaviors. The traditional view is that the emergence of herding in humans results from a failure to apply the advanced reasoning abilities that distinguish us from other animals. However, NSF-funded researchers Prof. Robert L. Goldstone and IGERT trainee Seth Frey of Indiana University have discovered spontaneous herding behaviors in how people reason abstractly through “what you think I think you think I think.” They introduced a version of the Rock-Paper-Scissors game in which participants earned money by anticipating what others were going to do, keeping in mind that everyone else was trying to anticipate them as well. People practicing this dizzying type of reasoning on each other tend to converge to the same type of thinking. They exhibited herding in the way they were reasoning. And surprisingly, those groups with the most herding earned the most money.

Whether looking at benign social habits or mass panics, social theorists have always treated human herd behavior as though it resulted from mindlessness. But if herding dynamics emerge from even the sophisticated reasoning processes of intelligent, motivated people, then they must be accommodated in economic theory, policy, and research. Higher-level reasoning processes could as easily be a cure for or a cause of the violent swings that we see in financial markets and other domains in which people are try to anticipate each other’s actions. This research, at the intersections of animal behavior, cognitive science, and behavioral economics, has been made possible by the NSF Integrative Graduate Education and Research Traineeship grant at Indiana University.

Address Goals

This activity address NSF’s strategic goal of Discovery by uncovering previously unknown herding behavior in higher-level human reasoning. Whether looking at benign social habits or mass panics, social theorists have always treated human herd behavior as though it resulted from mindlessness. But if herding dynamics emerge from even the sophisticated reasoning processes of intelligent, motivated people, then they must be accommodated in economic theory, policy, and research. Higher-level reasoning processes could as easily be a cure for or a cause of the violent swings that we see in financial markets and other domains in which people are try to anticipate each other’s actions. This activity addresses NSF’s strategic goal of Learning by engaging a Ph.D. student in research that cuts across multiple fields.