Money, trust, and group size: Implications for co-operation and marketing

burning money

money trust bbcThe British Broadcasting Corporation has reported on an intriguing study relating group size and the impact of money on trust and co-operation. The study suggests that in smaller groups, if you keep the money out of the picture, co-operation and trust are enhanced, but the magic number where things seem to switch — and money helps fuel co-operation, is 32.

The researchers used a worthless (but limited supply) token to create the money effect. The reason for this behaviour is probably not too surprising at some levels — the perceived scarcity means that people will do what they can to keep (or preserve) the resource, even if this perception is irrational. I think we can imagine the problems and difficulties with human evolution if families and small communities/villages needed to manage every transaction with cash; and how money conversely fuels co-operation through a universal exchange medium when the group is larger, and more diverse.

This research leads to interesting questions, of course, about how businesses organize their affairs, incentivize employees, and how business organizations interact with clients and influencers.  If money becomes less important (and in fact becomes counter productive) at the small group co-operation level, should we discourage or avoid individual incentives when we want the overall group to be more effective (obviously, if we are following this study, the reverse applies if your organization is larger.) Or should the incentives be paid to everyone in the group equally, despite varying levels of contribution/efficiency?

The next question arises with the marketing challenge. Brand relates to trust. Therefore, if we believe this study, money becomes relatively unimportant (and may be counterproductive) when we are interacting with smaller groups of clients/prospects or influencers. We’ll still need the money message if we want to broadcast an incentive or benefit, but maybe we need to give far less cash when we are working in smaller groups; focusing instead on spirit, respect, and community co-operation.

The study (published in journal PNAS):

  • Participants of between two to 32 individuals were able to help anonymous counterparts by giving them a gift, based solely on trust that the good deed would be returned by another stranger in the future;
  • In this setting small groups were more likely to help each other than the larger groups;
  • In the next setting, a token was added as an incentive to exchange goods. The token had no cash value;
  • Larger groups were more likely to help each other when tokens had been added, but the previous generosity of smaller groups suffered.
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