Thursday 23 July 2015

TRUST & RECIPROCITY

Greater trust makes a more inclusive and efficient society by reducing hoarding, biased and dis-satisfying maneuvers.
In the business of Shipping, how often, have have we ever considered the primary aim to be “Customer Satisfaction”, instead of immediate profits? No one would actually like to answer it, because reality is the trust deficit has never been worked upon.
On the other hand, in practice, trust between two entities, part of a contract can be a great motivation and a catalyst to efficient and harmonious growth, economically and emotionally.

There are two experimental games that are often used to represent important features of markets. First is the trust game. A buyer makes an offer for a good of unknown quality and, after receiving the offer, the seller can decide how much of the costly quality to supply. Many such transactions do not take place, due to lack of trust, or a belief that the lowest possible quality will be provided. Second is the ultimatum game. A seller posts a price which the buyer can take or leave. It is assumed that the seller has offered the “break even” price to the buyer. Thus, all efficient trades are made while the full profit (or nearly so) accrues to the seller.
However, in essence both games show that behavior is not as predicted. In trust game, people do in fact place trust in the sellers and this trust is (sometimes) rewarded with high quality. In the ultimatum game, sellers who grab too much of the profit are likely to have offers rejected. In both games concerns for quality (equity, if you like) are believed to be interacting with the natural market forces to increase efficiency in the trust game and to reduce efficiency in the ultimatum game.

In signing along the dotted lines, mostly, everyone signs a document which was written in advance, or refers to a general practice of the trade, forces every transaction to be reviewed under the same set of rules, and paid at the end without exchanging one word.

When the later does not happen, trust is compensated by litigation, arbitration or facilitation.

And, in interpreting the terms of such contract, more often than not, the judges and jurists would consider only the words, only some exceptional cases end up seeing Judicial adventurism, that would go deeper into the essence of the binding terms, what led to them, and if the general terms would be applicable under the precise lines of fault in the existing case in question. So, more often than not, the jurisprudence is guided by knowledge of English language (or the other such language that may be used for such a contract) and not the knowledge of the trade or logic. So, as a necessary solution, our more learned lawyer friends have come out with Tort, which I’d call “Tacit Over-ruling of Trust”.

Imagine, in essence, what is a contract? In the simplest way to put it, a contract was trust binded with individualistic social promise, which apart from everything else, was based on Reciprocity, the primary doctrine behind “Consideration”. Now, every contract is enforced with “minimum” contractual obligations under a given set of conditions. The best example is the “Warrantee” on goods available in the market. Contracts are not signed with confidence anymore, but with a prayer, born out of the minimum obligatory requirements. And top it with abstractions.

A contract needs to be understood as a consensus and not as a one way affair. You do not buy apples or tomatoes if they do not provide you the nutrients you seek, you should have the liberty of choice, and that should be the primary function of the principle of reciprocity. If a contract is signed that puts the entire onus to prove the wrong-doing or provide little scope of remedy to you, in comparison to the other party, then it is not reciprocal. So, if you meet a disclaimer in a signature “AS AGENTS ONLY” or anything that attempts to limit or over-rule any liability, please rest assured that you’ve met a specific and implied, but unwritten company policy that doesn’t aim at customer satisfaction. J
But then, many employees would not think twice, why they’ve been asked to sign off in such fashion.

The Law of Reciprocity means to give and take mutually; to return in kind or even in another kind or degree. You may have heard the Law of Reciprocity expressed as: "I'll scratch your back if you scratch mine." The law of reciprocity, (which applies in EVERY culture on the face of the earth), simply explains that that when someone gives you something you feel an obligation to give back.

Giving and receiving favors is a common exchange and is an implicit assumption in most of our relationships. When someone does something for you, they implicitly expect that when the circumstance is right, you will do something of approximately equal value for them. The expectation may never be discussed openly but nonetheless it exists and affects negotiations and relationships.

All parties must benefit from the relationship and invest in the relationship and acts must be mutually beneficial otherwise it would create an imbalance. When someone is the primary giver, they often expect they will receive in kind from the receiver or eventually from someone else in the world at another time.

If economic policies were to be based on this law or Principle of Reciprocity, there would be no imbalance. But then who wants a perfect World. Cola would not be selling, if they were to really bother about this principle.

I’d invite comments on how we interpret competence and quality today in view of these above arguments. In essence, you have to have self-pride and drive to do better in order to understand, that reciprocity comes, when you own your work, feel hurt, when you are unable to perform, feel anguished , when you loose and under any circumstances you do not compromise with the standards that you've set for yourself, know what I mean? To be better than yesterday, to do better than yesterday, to recognize that the only competition that you have is from yourself and none other.

Rajesh


3 comments:

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  2. Hi! This post couldn't be written any better! Reading through this post reminds me of my previous room mate! He always kept chatting about this. I will forward this post to him. Pretty sure he will have a good read. Thank you for sharing!

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    ReplyDelete