I recently read the book, Liars and Outliers by Bruce Schneir (Liars and Outliers: Enabling the Trust that Society Needs to Thrive: Bruce Schneier: 9781118143308: Amazon.com: Books) and wanted to share my thoughts about it.
The book is an excellent introduction to the concepts of Game Theory and the fundamental basis of "trust". The author stitches together different branches from security, economics, politics, biology and a lot more to describe how the concept of trust evolved over time and the reason it fails. The deep analysis of Dunbar number and the impact of technology that expand the scope of our interaction was quite interesting.
The author says that reining in defectors/outliers is not always a good thing either due to the cost or the implication it has on the societal interactions. It is a very non-technical book by a very technical author!
Interesting line from the book
Here are some of the interesting lines that I made while reading the book:
Compliance isn't always good and defection isn't always bad. In a police state, everybody is compliant but no one trusts anybody. p7.
Security is what you need when you don't have trust.. It's what brings risk down to tolerable levels, allowing trust to fill in the remaining gaps. p17.
In primates, the frequency of deception is directly proportional to the size of a species' neocortex: the "thinking" part of the mammalian brain. That is, the bigger the brain, the greater the capacity for deception. The human brain has a neocortex that's four times the size of its nearest evolutionary relative. p23
Division of labor is an exercise in trust.
There is an evolutionary advantage to being a parasite as long as there aren't too many of them and they aren't too good at it. p28.
"reciprocal altruism" - we tend to treat people as we have been treated. p34
.. we cooperate primarily because we crave reward (engagement) and fear punishment (exclusion) from other members of group. p88
.. we remember negative information about people more vividly, with more detail and for a longer time than positive information. It seems that knowing who will defect is more important than knowing whom to trust. p89
mistrust increases in a community as ethnic diversity increases. p92
There is a lot of evidence, worldwide, that people are predisposed to cooperate with someone who speaks the same dialect they do. p92
Cooperation works better if we all agree on what it means to cooperate. p93
(Talking about brands like fast food chains) Branding isn't necessarily about quality: it's about sameness... Their reputation reduces uncertainty. p95
(About media and social media) In order for reputation to scale, we need to trust these reputational systems, but sometimes that trust is not well-founded. p101
An increase in the severity of punishment often doesn't translate into a drop in crime: an increase in the probability of punishment often does. p118
Either the law should be effective, or it shouldn't exist. A law with a loophole is worst of both. p120
Our learned abilities to read trust signals are continually being overtaken by technology. p134
Competing interests and there competing pressures, can get stronger once defectors start to organize in their own groups. p143
Social pressures work better in small groups, so it's more likely that the morals of a small group trump those of a larger one than the other way round. p143
..if Alice has stronger ties to her employer than to society, she's more likely to cooperate with her employer and defect from society. Organizations try to keep their employees loyal for this reason. p162
.. market competition encourages sellers to ignore moral pressure as much as they can. p181
Reputation relies on transparency to work, but for many modern products, the seller knows a lot more than the buyer. p184
If a company can convince the government to resolve the dilemma in its favor, then its self-interest becomes the group interest. In this way, companies can defect in spirit by deliberately changing laws so they are not defecting in practice - thereby circumventing or subverting societal pressures. p186
In economics, changing laws to suit your desires without adding any value is knows as rent-seeking. p186
.. product bundles and subscription services hide prices and make it harder for customers to make buying decisions. p190
In general, the person responsible for a risk trade-off will make the trade-off that is most beneficial to him. p192
It's much easier for a large corporation to make many millions of dollars through breaking the law. But as long as the maximum possible penalty to the corporation is bankruptcy, there will be illegal activities that are perfectly rational to undertake as long as the probability of penalty is small enough. p193
Any company that is too big to fail - that the government will bail out rather than let them fail - is the beneficiary of a free insurance policy underwritten by the taxpayers. p193
If a government agency exists only because of the industry, then it is in its self-preservation interest to keep that industry flourishing. And unless there's some other career path, pretty much everyone with the expertise necessary to become a regulator will be either a former or a future employee of that industry, with the obvious implicit and explicit group conflicts. p202
'Corporations acting in the role of institutions'..This can happen whenever public infrastructure moves into private hands. With the rise of the Internet as a communications system, and social networking sites in particular, corporations have become the designers, controllers, and arbiters of our social infrastructure. p203
'Misunderstanding the risk': .. Another example is computer crime. It's pedestrian, common, slowly evolving, affecting others, increasingly familiar, and (at least by techies) well-understood. So it makes sense that we understate the risks and underfund security. p216
'Accidentally increasing the incentive to defect': When you start measuring something and then judge people based on that measurement, you encourage people to game the measurement instead of doing whatever it is you wanted in the first place. p218
Our risk tolerance has become so low that we have fetish for eliminating - or at least pretending to eliminate - as much risk as possible from our lives. p227
You get what you measure and things like short-term profitability are much more easier to measure than abstract concepts like long-term viability, or intangibles like customer satisfaction or reputation. p238