{"id":169448,"date":"2020-04-27T13:45:50","date_gmt":"2020-04-27T17:45:50","guid":{"rendered":"https:\/\/www.countingpips.com\/?p=169448"},"modified":"2020-04-27T09:23:09","modified_gmt":"2020-04-27T13:23:09","slug":"the-game-theory-of-panic-buying-and-how-to-reduce-it","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2020\/04\/the-game-theory-of-panic-buying-and-how-to-reduce-it\/","title":{"rendered":"The game theory of panic-buying \u2013 and how to reduce it"},"content":{"rendered":"
April 27, 2020<\/div>
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By Chris Stiff<\/a>, <\/strong>Keele University<\/strong><\/em><\/a><\/em><\/p>\n

During difficult times, we hope that everyone will pull together, keep calm, and work as a unit to ensure that society continues to run smoothly. Unfortunately, this is not always the case \u2013 as is particularly evident right now.<\/p>\n

Toilet paper has reached incredible prices<\/a> on eBay. Videos of supermarket brawls<\/a> populate the internet. One man in Tennessee bought 17,000 bottles<\/a> of hand sanitiser, hoping to sell them for a fat profit. In the UK, where I\u2019m currently under lockdown, we are increasingly seeing bare shelves in store and huge online queues to order groceries by delivery.<\/p>\n

But we are also seeing acts of kindness and benevolence \u2013 hospital doctors working long shifts to help treat ill patients, and social media campaigns to allow elderly, vulnerable individuals to have a dedicated hour to shop in supermarkets before they open. How can we explain these two approaches to crisis situations?<\/p>\n

The decision of whether to buy supplies in a socially responsible manner, or to hoard them, is related to game theory<\/a>. This approach is based around the understanding that our pay-off in some situations is based not only on what we do, but what on others do too. For example, getting the food we want from a supermarket is dependent on us and all (or most) other shoppers acting sensibly. If we decide to be socially responsible, that is of little effect if others decide to panic buy.<\/p>\n

Social psychology research suggests that there are two main motives<\/a> for \u201cselfish\u201d behaviour \u2013 greed and fear. When greedy, individuals are simply unconcerned with others and take what they want to benefit themselves. Fear is more complicated. In this case, individuals may wish to act in a socially-responsible fashion, but are concerned that others will not. If they shop sparingly and others hoard, they will be left with the worst outcome \u2013 the so-called \u201csucker\u2019s payoff\u201d. The belief that others are acting selfishly can often exacerbate<\/a> those tendencies in others.<\/p>

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How to stop hoarding<\/h2>\n

So how can self-interest be reduced? Research suggests several ways in which socially-responsible behaviour \u2013 and the reduction of hoarding \u2013 might be encouraged.<\/p>\n

One method may be to emphasise the feelings of kinship between shoppers. Perceiving others as similar to ourselves usually increases cooperation<\/a>. Another is to play down the idea that everyone is panic-buying. Fewer newspaper articles highlighting bare shelves should lower concerns about getting the \u201csucker\u2019s payoff<\/a>\u201d. And although acts of hoarding can lead to more hoarding, the opposite is also true. Acts of generosity can increase others socially minded tendencies and promote cooperation<\/a>.<\/p>\n

The extended nature of the situation should also be emphasised. When people believe they are in for the long haul, and may encounter the same people in the same situation again, they tend to be more socially responsible<\/a>.<\/p>\n

People tend to be more cooperative in small groups, especially with strangers. So, allowing small numbers of people into a place at once may help to reduce selfishness<\/a>. Luckily, this is happening already thanks to social distancing rules. Promoting discussion and conversation often improves relationships<\/a> amongst people in game theory-type situations. Although this may not be a very practical solution, perhaps the Blitz spirit of singing songs together could help with this \u2013 supermarket karaoke anyone?<\/p>\n

Finally \u2013 and perhaps more drastically \u2013 we could introduce punishment for acting selfishly. Social sanctions \u2013 such as naming and shaming or ostracising those who hoard \u2013 can often be effective<\/a>, but relies on the person caring about being shamed. Direct punishment \u2013 such as fines \u2013 can work, but only if it is strong enough to be a deterrent to others. Too weak a punishment can actually increase selfishness if individuals realise the cost\/benefit analysis will work in their favour<\/a>. It remains to be seen whether the regulations recently put in place in the UK banning groups of more than two people gathering in a public place will be strict enough to work as intended.<\/p>\n

Unfortunately, it is the case that some people just don\u2019t trust others<\/a> or actually prefer to make sure that others get less than them<\/a>. Little can be one about these ingrained personality traits. But, they are in the minority and over the coming weeks (or months) we will hopefully see that the human spirit is far stronger than a dangerous virus, even in the face of toilet paper shortages.\"The<\/p>\n

About the Author:<\/strong><\/em><\/p>\n

Chris Stiff<\/a>, Lecturer in Psychology, Keele University<\/a><\/em><\/p>\n

This article is republished from The Conversation<\/a> under a Creative Commons license. Read the original article<\/a>.<\/p>\n

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 <\/p>\n","protected":false},"excerpt":{"rendered":"

By Chris Stiff, Keele University During difficult times, we hope that everyone will pull together, keep calm, and work as a unit to ensure that society continues to run smoothly. Unfortunately, this is not always the case \u2013 as is particularly evident right now. Toilet paper has reached incredible prices on eBay. Videos of supermarket […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-169448","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/169448","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=169448"}],"version-history":[{"count":1,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/169448\/revisions"}],"predecessor-version":[{"id":169449,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/169448\/revisions\/169449"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=169448"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=169448"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=169448"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}