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Kakonomics, or Why We Sometimes Agree to Be Mediocre

In ancient Greek, _kakonomics_ means the economics of crappiness. More specifically, to philosopher of mind "Gloria Origgi":, it means the collectively insane phenomenon of tacitly agreeing with the companies and people we...

In ancient Greek, kakonomics means the economics of crappiness. More specifically, to philosopher of mind Gloria Origgi, it means the collectively insane phenomenon of tacitly agreeing with the companies and people we work for, as well as our friends and even partners, to do mediocre work and not deliver what we promise.

This weirdo of game theory is based on the idea that we try to avoid the disappointment that comes with giving something our all. If you have you ever done something intentionally poorly because you expected not to be rewarded very well – and felt disappointed because you actually ended up being rewarded nicely, you may have noticed kakonomics in action. This kind of tacit agreement toward mediocrity keeps people satisfied, but over time it brings the overall system down in the long run. Free riders aren’t the only threat to an exchange system, as we’re taught: anyone who engages in kakonomics is also to blame.

Origgi offers an explanation at Edge:

Take an example: A well-established best-seller author has to deliver his long overdue manuscript to his publisher. He has a large audience, and knows very well that people will buy his book just because of his name and anyway, the average reader doesn’t read more than the first chapter. His publisher knows it as well…Thus, the author decides to deliver to the publisher the new manuscript with a stunning incipit and a mediocre plot (the Low-quality outcome): she is happy with it, congratulates him as she had received a masterpiece (the High-quality rhetoric) and they are both satisfied. The author’s preference is not only to deliver a Low-quality work, but also that the publisher gives back the same, for example by avoiding to provide a too serious editing and going on publishing. They trust each other’s untrustworthiness, and connive on a mutual advantageous Low outcome. Whenever there is a tacit deal to converge to Low-quality with mutual advantages, we are dealing with a case of Kakonomics. Paradoxically, if one of the two parties delivers a High-quality outcome instead of the expected Low-quality one, the other party resents it as a breach of trust, even if he may not acknowledge it openly. In the example, the author may resent the publisher if she decides to deliver a High-quality editing. Her being trustworthy in this relation means to deliver Low-quality too. Contrary to the standard Prisoner Dilemma game, the willingness to repeat an interaction with someone is ensured if he or she delivers Low-quality too rather than High-quality. Kakonomics is not always bad. Sometimes it allows a certain tacitly negotiated discount that makes life more relaxing for everybody. As one friend who was renovating a country house in Tuscany told me once: “Italian builders never deliver when they promise, but the good thing is they do not expect you to pay them when you promise either.”

Come to think of it, the concept may also explain the behavior of a certain Italian president as well. It also adds weight to the argument that an economic model that doesn’t fully compensate people for the stuff they make (ie, a lot of the Internet) eventually ruins the quality of that content (ie, increasingly, much of our culture). However, it doesn’t really help explain the quality of work produced by multi-millionaire bands like Creed.

Read the original paper, L-worlds: The curious preference for low quality and its norms.