Friday, March 12, 2010

Behavioural Economics and the Classics: Ulysses and the Sirens

Ulysses is the name of a famous Irish book, as well as a medal we award here in UCD. The original Ulysses (or Odysseus) was immortalised in Homer's description of his role in the Battle of Troy and more prominently in the account of his leading of the troops home to Greece. A Ulysses pact refers to an episode during the journey where Odysseus instructed his sailors to tie him to the mast of the ship so that he could hear the music of the Sirens but would not succumb to the temptation of going with them forever and thus ruining his plan to get home to his wife and son. This is a constantly recurring metaphor in behavioural economics, most famously used by Jon Elster in his classic work "Ulysses and the Sirens: Studies in Rationality and Irrationality". More recently, Ahsraf, Karlan and Yin describe the use of a commitment device savings product in the the Philippines, using the title "Tying Odysseus to the Mast". It is often used to describe phenomena such as temptation, hot/cold gaps, making decisions before the onset of dementia and so on.


For one reason or another, this has been in my mind during the week and I have only come to think more clearly about it now.  The picture above (portrait by John William Waterhouse 1891 - public domain) is a beautiful metaphor for behavioural economics.  An agent with bounded self-control has prearranged for his hands to be tied so that he can fulfill his life's plan. It is particularly interesting to see him endure this suffering to maximise his broader goal, maximising his eudaimonic utility, to use the phrase. The reason I had this in my head all week was due to a sudden realisation that I had no idea how he enforced his sailors not to go away with the Sirens themselves. It has been a few years since I have read the Odyssey and I could not figure it out just from memory and did not want to cheat by googling it. I gave up on that this evening, and the internet reminds me that he ordered his sailors to fill their ears with wax. It still raises questions as to how firm a commitment device this is. How hard is it for the sailors to take out the wax from their ears (or not put it in properly in the first place), in which case they will be likely to go to the Sirens and also more likely to agree to the request of Odysseus to be untied? Also, he places a lot of stock in the ability of his sailors to follow orders not to follow orders in the sense that he needed them to be strong enough to ignore his entreaties to be untied. Furthermore, he trusts that his men wont take advantage of his vulnerable state to oust him. His commitment device works not only because of the wax but also because he is able to impose his will on the people who enforce it.

3 comments:

Kevin Denny said...

So what particular temptation made you think of this and have you arranged for your own "sailors" to tie you down Liam? I think we need to know.

Liam Delaney said...

no temptations. Have 230 slides for an 8 hour session and reckon I am going to have to put some pictures in or people will start getting pretty bored.

Kevin Denny said...

Thats a long session, your audience may experience some temptations...