Tag: applied signaling

Book Review: Codes of the Underworld

I recently finished Diego Gambetta’s Codes of the Underworld: How Criminals Communicate.  For those looking for a more academic take on signaling (particularly from a sociological point of view) it’s a great find.  As I previously mentioned, Gambetta uses the extreme case of cooperation amongst criminals to tease out more general dynamics of trust, signaling, and communication.  The Mafia can be considered a “hard-case” for theories of signaling trust; given the extreme incentives for criminals to lie and the lack of credibility they wield given the very fact that they are criminals, how is it that criminals manage to coordinate their actions and trust each other at all?  By understanding how trust works in this harsh environment we learn something about how to signal trustworthiness in broader, less restrictive environments.  As Gambetta notes:

Studying criminal communication problems, precisely because they are the magnified extreme versions of problems that we normally solve by means of institutions, can teach us something about how we might communicate, or even should communicate, when we find ourselves in difficult situations, when, say, we desperately want to be believed or keep our messages secret.

The book is a great example of studying deviant cases or outliers, particularly when the area of study is not well worn.  This is a valuable general methodological lesson.  We are typically taught to avoid outliers as they skew analysis.  However, they can be of great value in at least two circumstances: 1) Generating hypotheses in areas that have not been well studied and 2) Testing hypotheses in small-N research designs, where hard cases can establish potential effect and generalizability and easy cases suggest minimal plausibility.

Gambetta takes a number of criminal actions and views them through the lens of signaling.  This allows readers to see actions, in many cases, in completely new ways, highlighting the instrumental causes of behavior.  For example, Gambetta looks at how criminals solve the problem of identifying other criminals by selectively frequenting environments where non-criminals are not likely to go.  Since criminals cannot advertise their criminality, they face a coordination problem.  Frequenting these locations acts as a screening mechanism since only those that are criminals are likely willing to pay the costs to frequent these locations.  (This ignores the issue of undercover law enforcement, but Gambetta deals with that as well).  Gambetta also makes the reader look at prison in a new light.  Criminals derive a number of advantages from serving time in prison, not the least of which is providing them with a signaling mechanism for communicating their credibility to other criminals (as prison time can be verified by third parties).  Additionally, many criminal organizations will require that new members have already served time before they are allowed to join.  Moreover, Gambetta explores how incompetence can work to a criminal’s advantage, since it can signal loyalty to a boss who provides the criminals only real means of income (a topic I discussed here).

Gambetta also looks at the conspicuous use of violence within prisons.  This isn’t a new topic, as any law enforcement drama will undoubtedly portray the dilemma of a new inmate who must establish their reputation for toughness and resolve or else suffer constant assaults by other inmates.  However, Gambetta makes it interesting by embedding the acts in a signaling framework.

First, Gambetta’s hypothesis regarding the importance of non-material interests is borne out by various studies.  Among others, he cites one study of prison conflict that found:

“[n]on-material interests (self-respect, honour, fairness, loyalty, personal safety and privacy) were important in every incident.”  While only some violent conflicts occur for the immediate purpose of getting or keeping resources, all of them have to do with establishing one’s reputation or correcting wrong beliefs about it.  Even “a conflict that began over the disputed ownership of some item could quickly be interpreted by both parties as a test of who could exploit whom.”

Second, Gambetta hypothesizes that we should expect to see more fights when prisoners do not have enough of a violence track record when they first arrive in prison.  One observable implication of this is higher rates of prison violence among female prisoners and younger prisoners.  In fact, the empirical record bears this out quite nicely.  Rates of violence are inversely related to age, providing ” a plausible social rather than biological explanation” for youth violence.  Additionally, Gambetta finds that, although less violent in the outside world, “women become at least as violent and often more prone to violence than men”.  Interesting, women are less often convicted of violent offenses, suggesting that the results are not simply the result of selection effects.

Both points have implications for political science and international relations, given the growing use of signaling models to explain political behavior.  The issue of reputation in international relations is one that is still growing and Gambetta’s hypothesis about lack of “violence capital” fits right in to much of the current work in conflict studies.

Overall, Codes of the Underworld is unique and thought-provoking work.  For those with a strong interest in communication and signaling, it is a must read.

[Cross-posted at Signal/Noise]

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Friday Signaling Roundup

Here are a few quick signaling items for your perusal.  I will try to do a similar roundup each Friday if I’ve stumbled on enough items throughout the week.  Enjoy!

  • How to Signal That You Are Marrying for Love? It’s tougher than you might think.  Some suggest using a pre-nuptial agreement to signal one’s love and affection instead of their love of money.  If one is truly marrying for love and not money they should have no problem signing a pre-nup if they are the less-wealthy of the pair.  However, the pre-nup may act as a signal from the wealthier of the two parties that they have reason to believe that the marriage will not last.  Therefore, pre-nups are likely only an optimal signal when they are suggested at first by the least wealthy member of the couple. (via Cheap Talk)
  • Tyler Cowen asks the questions “Which ingredient most signals a quality dish?”:  I can’t think of one off the top of my head.  Scallions is noted in the post, and that’s a pretty good one.  I’d think that ingredients that are financially costly and/or time consuming to prepare would also signal quality.  So, higher quality cuts of meat or dishes that are slow roasted or smoked, etc.  A friend of mine once remarked, “Ah, Bean salad.  If you’ve got bean salad then you know there is going to be great desert.”  He was using the quality of an earlier dish to predict the quality of a later one.  (via Marginal Revolution)
  • Can Cheap Talk Deter (PDF)? Potentially in an entry-deterrence situation, according to a draft paper by Dustin Tingley and Barbara Walter.  Tingley and Walter find that in an experimental setting, contra the expectations of their formal model, when participants were able to make a verbal threat to the first potential market entrant it decreased the instances of conflict from 83% (where communication wasn’t allowed) to 38%.  This is interesting, since the verbal threats by the defender where by definition costless (since they wouldn’t not face the challenger again and additional challengers would not know if they followed through on the threat)–meaning, they shouldn’t have revealed any additional information to the challenger.  My first thought is that in an experimental setting subjects might be revealing information through their body language or micro-expressions (which can’t be captured by a formal model) and that these signals conveyed additional information to the challenger.  But defenders where only allowed to communicate their threats to challengers through email.  The authors offer some potential reasons for the discrepant results, such as the unexpected success of early round costless threats actually signals that the defender is a savvy player and understands the game (i.e. fighting early in early rounds to deter future entrants makes sense, and therefore they are likely to follow through on the threat since future entrants will see that they fought).

[Cross-posted at Signal/Noise]

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The Individual Utility of Incompetence

There are many reasons why organizations (government, businesses, etc) grow dysfunctional and stagnant.  One major reason lies with the promotion and retention of less capable workers.  There have been a number of studies that explored this dynamic (for example, The Peter Principle, which theorizes that people are promoted as long as they are competent, which means at some point they reach a position of incompetence).  In general, though, the promotion and retention of incompetent workers would seem to run counter to the rational interests of the larger organization.  So why does this behavior persist?  Why are less competent workers able to retain their positions and, in some cases, obtain promotions?

One potential reason is that it is their very incompetence that is valued.  Incompetence acts as a credible, costly signal that they can be trusted by superiors looking to accumulate a power base.

Sociologist Diego Gambetta is a pioneer in the study of signaling.  In his 2007 book Codes of the Underworld: How Criminals Communicate, Gambetta uses the extreme case of cooperation amongst criminals to tease out more general dynamics of trust, signaling, and communication.  The Mafia can be considered a “hard-case” for theories of signaling trust; given the extreme incentives for criminals to lie and the lack of credibility they wield given the very fact that they are criminals, how is it that criminals manage to coordinate their actions and trust each other at all?  By understanding how trust works in this harsh environment we learn something about how to signal trustworthiness in broader, less restrictive environments.

Gambetta theorizes that one way that a criminal can signal their trustworthiness to another is through their own incompetence:

The mobsters’ henchman, so often caricaturised in fiction as an énergumène, epitomizes the extreme case of this class. If he were too clever he would be a menace to the boss. Idiocy implies a kind of trustworthiness.  […] One way of convincing others that one’s best chance of making money lies in behaving as an ‘honourable thief’, is by showing that one lacks better alternatives.  […] Incompetence is one way of telling people “You can count on me for even if I wanted to I would not be able to cheat.”

Through this mechanism, lower-level criminals can signal their trustworthiness to their bosses, since they are essentially dependent on their bosses for their economic gains given their lack of independent skill and intelligence.  This pervasive logic means that criminal organizations are likely to employ mostly incompetent criminals and that leaders will likely surround themselves with less competent lieutenants over time.

It is not hard to see this same logic play out in businesses, schools, and government.  If organizations are set up in such a way where the accumulation of loyalists is incentivized instead of performance, we should expect to see a greater number of incompetent employees relative to competent ones.  Additionally, we should see more incompetent employees advance as their “sponsor” advances.

[Cross-posted at Signal/Noise]
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Applied Signaling: Pajamas and 3-year olds

Every night, about 15 minutes or so after we’ve put my 3-year old daughter to bed, we inevitably hear a knock at the door.  She’s typically knocking because she needs to go the bathroom.  She’s also knocking because she wants to scope out what we are doing, find out if she is missing anything.  One thing that bothers her is if me or my wife leaves the house after she goes to bed.  In order to go to sleep she needs some kind of guarantee that we aren’t leaving and are getting read to go to bed just like her.  It appears she’s found one–whether me or my wife have gotten changed into our pajamas.

If we come to her door in our pajamas–or at least different clothes (e.g. sweatpants, etc) than when she last saw us–she takes it as a signal that we are in for the night.  If we were going out or not going to bed soon we would still be in our regular clothes that we wore earlier.  If we haven’t changed, she probes–“why aren’t you in your jammies?”  This let’s us know that she suspects we aren’t in for the night.  It also means that she will likely spend a fair amount of time looking out her window to see if our cars stay in the driveway before she will settle in and go to sleep.  Now, putting on pajamas isn’t that costly of signal–there is nothing stopping us from putting them on and then changing back into regular clothes to leave the house or host guests.  (However, in all honestly this isn’t likely to happen.)

The lesson here is that a) the idea of seeking out signals is intuitive for people and we start at a very early age, and b) rather than fight with our daughter about going to bed we might be better served just changing into our pajamas out the outset to demonstrate to her that we aren’t leaving the house, no one is coming over, and we are also getting ready for bed.  She may not believe our words, but she seems to believe the signal that she’s identified.  Leveraging that signal can lead to better communication and the outcome that we want.

[Cross-posted at Signal/Noise]

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