New research suggests people distrust policies that inflict short-term pain but benefit everyone by encouraging a shift in behavior. They prefer alternatives that seem better at first, but merely reinforce bad decisions. This isn’t as simple as the marshmallow test—have one now, or have two 10 minutes from now—that demonstrates the average person’s preference for immediate rewards. Rather, it seems people have difficulty predicting a law’s “equilibrium effects,” or how it will change future behavior for the better. That, or they don’t trust it will actually work. [...]
In a study released earlier this month, researchers tested this bias by having college undergraduates play a few rounds of the prisoner’s dilemma. The original version of the two-player game rewards both participants if they agree to share a prize, but gives one player the full bounty if he or she betrays the other. However, if both players betray each other, they get nothing.
The researchers offered students a variant: same rules, but taxes took a bite out of any payout, and betrayers had to pay a bit more. Even though everyone made less money, the new penalty for betrayal encouraged cooperation, meaning fewer players ended up with nothing, and everyone got richer in the long run.
But when offered a choice between the games, most participants stuck with the original setup, turned off by the reduced payouts.
