This study is directly relevant to life as an associate at a big law firm. As an associate at a big firm, one competes with other associates for a very limited number of partnership positions. Associates work crazy hours, respond to emails at all hours of the night, and generally have no life.
All associates would actually be better off if all associates would agree to be mediocre. If all associates billed 500 fewer hours per year across the board, the same people would still be made partner — the result would be unchanged — but we would all have an extra 500 hours to enjoy.
This doesn’t work though, because someone will always cheat. (We are lawyers.) Even if everyone agrees to bill only 1800 hours, there will always be that guy who thinks he can get ahead by billing just a few more hours. It becomes a race to the bottom where the desire to provide a future for one’s wife and children competes with the crushing mental and physical anguish of billing yet another hour.
The Italians seem to have solved that problem with a combination of social pressure and lowered expectations.
Abstract. We investigate a phenomenon which we have experienced as common when dealing with an assortment of Italian public and private institutions: people promise to exchange high quality goods and services (H), but then something goes wrong and the quality delivered is lower than promised (L). While this is perceived as ‘cheating’ by outsiders, insiders seem not only to adapt but to rely on this outcome. They do not resent low quality exchanges, in fact they seem to resent high quality ones, and are inclined to ostracise and avoid dealing with agents who deliver high quality. This equilibrium violates the standard preference ranking associated to the prisoner’s dilemma and similar games, whereby self-interested rational agents prefer to dish out low quality in exchange for high quality. While equally ‘lazy’, agents in our L-worlds are nonetheless oddly ‘pro-social’: to the advantage of maximizing their raw self-interest, they prefer to receive low quality provided that they too can in exchange deliver low quality without embarrassment. They develop a set of oblique social norms to sustain their preferred equilibrium when threatened by intrusions of high quality. We argue that cooperation is not always for the better: high quality collective outcomes are not only endangered by self-interested individual defectors, but by ‘cartels’ of mutually satisfied mediocrities.
(HT Kids Prefer Cheese)