Excess Loyalty Signals

We tend to think of coalitions and conspiracies failing via betrayal. But in fact, I’d guess, they usually fail by excess loyalty signaling: members prefer to do what other members think is good for the group, rather than what private info could suggest is actually good for their group. Even in business. Karl Smith:

I see the back rooms of opposing lobbyists all the time. Here at the state level I can safely say that virtually no one has any idea what they are doing. That is, for the most part the lobbyist do not know and indeed are not particularly interested in what is in the best interest of their clients.

Further, this seems to stem from the fact that the clients are not particularly interested in what is in their best interests. What they are very interested in is whether legislation is pro them or anti them. However, if you begin to talk about the economy as a complex system full of unintended consequences where anti legislation could be in their best interests their eyes glaze over.

Moreover, a very large number of business lobbyists are not even that interested in efforts that are pro or anti their business. They are more interested in legislation that is pro-business in general and that they perceive as being fair. (more; HT Tyler)

A business group that used decision markets to estimate what would actually help them most might profit greatly thereby. But suggesting this change might signal disloyalty, at it suggests mismanagement by current group leaders.

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  • Shane

    Different but related?

    “The Abilene paradox is a paradox in which a group of people collectively decide on a course of action that is counter to the preferences of any of the individuals in the group. It involves a common breakdown of group communication in which each member mistakenly believes that their own preferences are counter to the group’s and, therefore, does not raise objections. A common phrase relating to the Abilene paradox is a desire to not ‘rock the boat.’” (http://en.wikipedia.org/wiki/Abilene_paradox)

  • http://daedalus2u.blogspot.com/ daedalus2u

    A better example is what is called “enabling”.


    This is the dynamic where a sycophant agrees with someone with higher status and does what the higher status person wants, even if it is detrimental. The classic example is covering up for an alcoholic. The alcoholic can then get even more dysfunctional until everything breaks.

    I think this is extremely common in political signaling and is probably the root cause of the financial problems in Europe right now. Very serious people want to signal they are serious by compelling more austerity even though austerity isn’t going to grow the economy out of the recession it is in.

    AGW deniers want to signal support for the fossil fuel industry and they are ready to deny reality to do so. Religious followers suspend disbelief even though there is no data to support what their self-proclaimed religious leaders say.

    Krugman has a good example today on pollution controls. Every time pollution controls are proposed, there are claims that the sky will fall. Then pollution controls are implemented and the sky doesn’t fall and we end up with a cleaner and better environment.

    The recent political “fiasco” (to quote the WSJ) is another example of signaling by disagreement and by doing so, damaging your position, aka shooting oneself in the foot.

    • Veridical Driver

      Krugman has a good example today on pollution controls. Every time pollution controls are proposed, there are claims that the sky will fall. Then pollution controls are implemented and the sky doesn’t fall and we end up with a cleaner and better environment.

      Except that pollution controls have lead to off-shoring much of our manufacturing overseas to places with even less pollution controls… it has killed entire domestic industries, while increasing pollution (we reduce 50 tons of CO2 in the U.S. and replace it with 100 tons of CO2 in China). Krugman’s claims are highly dubious.

      But of course, mentioning Krugman is itself social signalling. Krugman doesn’t produce articles designed to win people over to his viewpoint, he writes articles that make people who share his views feel good, at the cost of actually winning over other people. Krugman is telling you what you want to hear (i.e. that pollution controls never have any negative consequences), and uses his prestige to help validate your pre-existing bias toward pollution controls, rather than win over people like me that aren’t implicitly supportive of pollution controls.

  • bellisaurius

    I’m not entirely sure it’s a loyalty issue. Given the rise of the professional class, and it’s concerns for the actual activity as opposed to systems outside of its expertise (engineers do engineering, teachers do teaching, and managers somehow manage), it makes sense that a lobbyist would focus hardest on what it was hired to do, lobby on its topic.

  • simon

    “AGW deniers want to signal support for the fossil fuel industry and they are ready to deny reality to do so.”

    That is an extremely bizarre claim, how many people do you think think of themselves as fossil fuel industry supporters?

    • http://daedalus2u.blogspot.com/ daedalus2u

      I would think that politicians who enact legislation subsidizing the fossil fuel industry would consider themselves to be “fossil fuel industry supporters”.


      I would think that politicians who receive campaign donations from fossil fuel companies do so because those fossil fuel companies consider them to be fossil fuel industry supporters.


      My guess is that those politicians signaled to the industry by voting for subsidies, and then those industries signaled to the politicians by giving them campaign contributions.

      Then there is this report.


      Detailing that scientists working for the fossil fuel industry were aware of AGW and considered it correct decades ago.

      As someone who does understand the science behind AGW, there is zero credible science that opposes it. AGW denial isn’t based on science, it is based on something else, tribal affiliation makes the most sense, many humans are ready to deny reality for tribal reasons. The “tribe” in this case is the fossil fuel industry.

      Part of the problem is that the fossil fuel industry is built on an economic bubble. The stock price and market value of the industry is based on the reserves that individual companies have access to, and the expected value of those reserves in the future. If those reserves cannot be recovered, sold and burned, then they do not have a value. The reason why they cannot be burned does not matter. If the reason is because of AGW or because they don’t exist, or because renewable energy sources are cheaper, it doesn’t matter. If the value in the future drops below the cost of extraction, then those reserves are of zero value and are not an asset of the company that holds them.

      When the market appreciates that not all of those reserves can be burned because of AGW, then the value of companies that hold those reserves will drop, and drop precipitously. The market capitalization of the fossil fuel industry is a bubble. Holding off the collapse of that bubble is what the fossil fuel industry and its supporters are trying to do because the longer they can hold that bubble collapse off, the longer they can earn interest on the inflated bubble price of their fossil fuel reserves.

      • Veridical Driver

        I doubt that AGW are showing tribal loyalty to the petroleum industry. Most likely, they realize that so much of our economic activity is petroleum based, and that it would be political suicide to ask Americans to lower their standard of living to address a long-term problem that won’t become a crisis until their political careers have ended (and most likely, they are dead). They have decided that serious global climate change in the future is an acceptable trade for easy prosperity (and thus re-election) today. It would be politically unacceptable to openly admit that they are willing to make such a trade, so instead they pretend AGW doesn’t exist. It isn’t signaling loyalty about anything, it is pure political pragmatism.

        I think the real signaling of loyalty is the politicians who have made fighting AGW a significant plank of their platform, while not really doing anything significant to fight AGW. Obama isn’t really that different from AGW-denying Republicans, except that Republicans pretend that AGW doesn’t exist, while Obama pretends that token subsidies to political cronies is a significant effort to fight global climate change.