Reciprocity Rings

Recently, I have been facilitating a reciprocity ring in my community, but with a slight modification: to make it a repeated event rather than a one-time workshop. This is because reciprocity requires trust, and trust takes time to build. We meet every two weeks in the common area in our apartment complex, and through it I have met some great people who I have learned to trust. I am looking forward to seeing how the group evolves, and I also hope to start other reciprocity rings so that I can communicate unmet needs across community boundaries.

I also hope to inspire others to start reciprocity rings in their communities or organizations, like how Wayne Baker inspired Adam Grant and Adam Grant inspired me. But I’m sure that while Wayne Baker may have coined the phrase “reciprocity ring”, the idea was not truly unique – it was borrowed from traditions and practices that have supported communities for generations. Perhaps sometimes we need new names for the old ways, because the meanings of words drift and twist over time. Today, it might be a “reciprocity ring” that helps people remember how to connect with one another, tomorrow, who knows what it will be? Regardless of the name or form, the fundamentals stay more or less the same. So, in case the term “reciprocity ring” ever falls out of fashion, here are the theories behind the practice.

Theoretical Underpinnings

Over the past few years since starting Harmonic Reciprocity Systems, I have been researching the theories behind reciprocity so that I can better design organizational structures and activities that support cooperation, such as the reciprocity ring. Here are some of the theories that inform my work:

Game Theory

Game theory is a field of mathematics in which different scenarios between people are analyzed for their various payoffs, and it predicts that “rational” people will choose the outcome that will maximize their individual payoff. In some scenarios, especially ones involving cooperation with others, an individual’s “rational choice” is to not cooperate. For example, if you have ever worked on a group project, the “freeloader who does nothing, but gets the same grade” follows this logic. The danger with this logic is that if everyone follows it, everyone fails. This is what is referred to as the “prisoner’s dilemma” and is a central problem for cooperation. Therefore, if cooperation is the goal, it is important to understand this dilemma and how to overcome it. In Trust and Reciprocity: Interdisciplinary Lessons from Experimental Research edited by Elinor Ostrom and James Walker, the researchers demonstrated through a variety of experiments that 1.) people consistently cooperate more than game theory predicts and 2.) that there are certain strategies and variations on the dilemma that lead to higher levels of cooperation and reciprocity.³

One of the variations on the “prisoner’s dilemma” game that leads to higher cooperation is the “repeated prisoner’s dilemma” game. In repeated interaction, especially those with no definitive end date, the logic changes. Suddenly, a strategy of selfishness and non-cooperation no longer pays off, and instead, those who cooperate with others come out on top. The simplest strategy for cooperation in this “game” is the “Tit for Tat” strategy, outlined by Robert Axelrod in his book The Evolution of Cooperation.⁴ The premise of his book is simple: he had a competition where people could submit computer programs to try to win in a repeated prisoner’s dilemma simulation. Some people came up with elaborate schemes, trying to figure out how to get inside the other players’ heads, and take advantage of them with no consequences. However, all the scheming was useless. The winning strategy was simple: start by cooperating, then mirror the other player’s last move. It is friendly and forgiving, but not exploitable. The way this plays out in day-to-day life would be as follows: be initially cooperative with everyone and never initiate a feud, but if someone takes advantage of you, stop cooperating with them. However, if they “extend an olive branch” and begin cooperating again, go back to the default mode of friendly behavior. Basically, don’t hold grudges, but don’t be a pushover either.

Of course, not everything in life fits neatly into this strategy. Sometimes the best move is to stop engaging with someone all together and avoid an endless volley of tit-for-tat. Life is too short to be wasted on drama. This strategy is outlined in a paper by Rand et al. titled Dynamic social networks promote cooperation in experiments with humans.⁵ In the paper, the authors explored how flexibility and mobility in social network aids in promoting cooperation. Essentially, when people have the ability to choose who they associate with in repeated interaction, they tend to avoid people who are selfish and instead group up with people who cooperate. In this way, rather than the direct negative reciprocity (revenge) of “Tit for Tat”, non-cooperative humans instead get socially ostracized. This points to the importance of free-will of association for reciprocity to take hold. If attendance to a “reciprocity ring” or other similar group is forced, cooperation is less likely. Voluntary groups are much more effective in maintaining cooperation. This was also one of the main points of Elinor Ostrom’s Nobel-prize winning book Governing the Commons: The Evolution of Institutions for Collective Action: that shared resources are most efficiently managed not through top-down hierarchical systems of coercion, but rather through horizontal, networked and voluntary structures.⁶ So while strategies like “tit-for-tat” are effective in situations where you are stuck with someone, adjusting your pattern of affiliation is often the path of least resistance.

Exchange Theory

Another big piece to understanding how “reciprocity rings” work is something called exchange theory. Exchange theory is essentially the theory that people seek balance in relationships, that people keep a mental ledger of social credits and debits incurred during social interaction. In this accounting of social exchange, equal exchanges create bonds of friendship, and unequal exchanges create bonds of indebtedness and power. For example, if person A is helped by person B, person A may feel like they owe person B a favor. If the obligation is not discharged, a power dynamic may be set up. This is why charity, while it may do a lot of material good, ultimately reinforces the existing unequal power structures in society. In the words of the sociologist Peter Blau, from his book Exchange and Power in Social Life, he observes that “reciprocated benefactions create social bonds among peers, whereas unreciprocated ones produce differentiation of status.”⁷ This is why the structure of the reciprocity ring is that the requests originate from and are filled by the members themselves. This self-supporting structure tends to lead to a balance in power and status in the group rather than a hierarchy.

But some temporary imbalances are healthy, in fact, they are essential. If all exchanges were completely equal, then social life would be reduced to transactions, and that isn’t what reciprocity is all about. While reciprocity tends towards balance, its power lies in its flexibility to temporarily be unbalanced. This is like when you go out to eat and one friend picks up the bill, trusting that their friends will pick it up the next time. As a result, you don’t have to split the bill and can focus more on enjoying each others’ company. There is still an internal accounting of who owes what, but it is not as strict as checking out at the cash register; it is more governed by peer pressure that grows stronger the more one takes. But what causes the imbalances in the first place? If exchange theory predicts that there is a restoring force towards equilibrium, what drives the behaviors that get the whole thing going? If society is like a pendulum, in that it always goes back to center, what gets it swinging?

In a paper titled The Roots of Reciprocity: Gratitude and Reputation in Generalized Exchange Systems by Simpson et al., the authors explored how reciprocity takes hold in groups engaging in “generalized exchange”.⁸ Generalized exchange is when people give to others in a group without any expectation of immediate or direct return. What motivates people to enter into this sort of gift-economy, given its open-ended and potentially exploitable nature? Non-cooperative game theory would predict that no-one would enter into a generalized exchange system, but in reality, people do it all the time. To better understand why people give to one another in these groups, the authors identified two compelling mechanisms: 1.) Indirect Reciprocity, and 2.) Generalized Reciprocity. Indirect reciprocity is when someone gives to someone who gave to someone else, i.e. rewarding the generous. When indirect reciprocity is the main factor behind generalized exchange, it is fueled by ego-driven reputation seeking, because people want to be seen as generous by others to be rewarded. The other mechanism, generalized reciprocity, is fueled by gratitude. It is when someone gives to others after they have received from others. It is the desire to “pay it forward”, or “give back to the community”. The authors found that “indirect reciprocity”, or reputation-seeking behavior, was best in getting generalized exchange going, while “generalized reciprocity”, or gratitude, was best at sustaining it. Therefore, if you want to start a sustainable generalized exchange system, you need to simultaneously provide recognition for givers so that those who are ego-driven can “prime the pump”, while also cultivating a culture of gratitude to keep it going. This is another reason why meeting together regularly and following up on requests is so important – it gives people an opportunity to be seen as generous and trustworthy by others and to express gratitude when requests are met.

Social Capital Theory

Another framework that can be used to help understand how a reciprocity ring works is the concept of social capital. The sociologist Nan Lin writes in his book Social Capital: A Theory of Social Structure and Action that social capital is “resources embedded in a social structure that are accessed and/or mobilized in purposive actions”.⁹ It is a form of capital: resources used for personal gain, but instead it is a feature of social networks. It is the combination of the strength of one’s relationships and the resources that their contacts have. The resources flow through the network, and trust is the conduit that makes it possible. For example, neighbors that trust each other may share tools and equipment that are not frequently used. This practice helps distribute the costs across the community, increasing everyone’s quality of life without any additional financial capital.

Having a lot of social capital is like when someone says they feel rich because they have good friends and good community. It is a big part of what makes people happy and healthy. Unfortunately, social capital has been declining for decades. In Robert Putnam’s book Bowling Alone: The Collapse and Revival of American Community, he explains how since roughly the 1970s, traditional patterns of community engagement, from civic engagement to church attendance to informal social gatherings, have been declining.¹⁰ But engagement is not falling because people no longer have needs. People are just filling those needs through the marketplace more. They are buying things they could borrow from friends, paying people for services that could be a favor. And like how loan sharks charge exorbitant interest in exchange for offering low-barrier credit, the low-trust transactional environment of the marketplace requires higher margins for businesses to survive. As a result, the wealth gap increases, and the majority of people become even more desperate. The answer to this growing problem isn’t a new gizmo or doodad. Rather, building social capital in communities and organizations through regular intentional interaction (like a reciprocity ring) is key to forming the connections that help people thrive.

How to Run a Reciprocity Ring

For more detailed instructions for running a reciprocity ring, I recommend the instructions provided by the Wharton Alumni Club.

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1. Adam Grant, Give and Take: Why Helping Others Drives Our Success (Penguin, 2014). ↩︎
2. Wayne E. Baker, All You Have to Do Is Ask: How to Master the Most Important Skill for Success, First Edition (Currency, 2020). ↩︎
3. Elinor Ostrom and James Walker, eds., Trust and Reciprocity: Interdisciplinary Lessons from Experimental Research, 1. papercover ed., 2. [print.], The Russell Sage Foundation Series on Trust, vol. 6 (Russell Sage Foundation, 2005). ↩︎
4. Robert M. Axelrod, The Evolution of Cooperation, Rev. ed (Basic Books, 2006). ↩︎
5. David G. Rand et al., “Dynamic Social Networks Promote Cooperation in Experiments with Humans.,” Proceedings of the National Academy of Sciences of the United States of America (United States) 108, no. 48 (2011): 19193–98, https://doi.org/10.1073/pnas.1108243108. ↩︎
6. Elinor Ostrom, Governing the Commons: The Evolution of Institutions for Collective Action (Cambridge university press, 1990). ↩︎
7. Peter Blau, Exchange and Power in Social Life (Routledge, 2017), 8. ↩︎
8. Brent Simpson et al., “The Roots of Reciprocity: Gratitude and Reputation in Generalized Exchange Systems,” American Sociological Review 83 (February 2018), https://doi.org/10.1177/0003122417747290. ↩︎
9. Nan Lin, Social Capital: A Theory of Social Structure and Action, Repr, Structural Analysis in the Social Sciences 19 (Cambridge Univ. Pr, 2007), 29. ↩︎
10. Robert D Putnam, Bowling Alone: Revised and Updated: The Collapse and Revival of American Community (Simon & Schuster, 2020). ↩︎