How (Not) To Behave In a Crisis

Panic buying, face masks and other irrational ways we have behaved in this crisis—why we do it and what we can do about it.

Photo by @markusspiske on Unsplash.

Panic buying was a widespread phenomenon observed of buyers at the start of the COVID-19 crisis. With food supplies and household products being in particular demand (toilet paper sales skyrocketed by a shocking 700% between February and March!), many supermarkets were forced to impose limits on the number of items shoppers can buy.

A selection of photos of shoppers stockpiling. Images by @abewitchedangel on Twitter (top left); @tinik972 on Twitter (top right); Forbes (bottom left); and Telegraph (bottom right).

Why do we panic buy?

Some people may panic buy as a form of forward planning. However, more often than not it is a way we cope with our fears and anxieties during times of uncertainty. When things appear out of our control, taking bold, decisive action may help us to re-exert control over a situation, even if these actions reduce our risk in one respect but are largely ineffective for solving the problems we face (e.g. buying massive amounts of toilet paper in response to a pandemic).

Panic buying may also be triggered, and reinforced, by herding behaviour. Seeing other shoppers empty shelves and prices rise in response may spur our own sense of urgency to buy. “It’s already sold out in three supermarket chains, if I don’t buy now I will miss out…” FOMO — the fear of regret, or of missing out — can provide a strong motive for herding, allowing the behaviours of others to reinforce our own.

The ‘rationality’ of panic buying

Although panic buying is dismissed by some as irrational, it accords with a ‘rational’ outcome in behavioural game theory — the prisoner’s dilemma. The analogy proceeds as follows — two members of a criminal gang are arrested and seperately interrogated. The prosecutor does not have sufficient evidence to prosecute both, so he offers each gang member a bargain. If they testify on the other gang member, they receive a lighter sentence. If they do not, they receive a full sentence.

The well-publicised outcome of this experiment (that each gang member will testify on the other) suggests that two agents, each acting ‘rationally’ and in their own best interests, will settle for outcomes that are worse off for both parties.

The prisoner’s dilemma is in some ways analogous to the dilemma faced by shoppers in a supermarket. Consider the following stylised example involving two shoppers:

1. In this scenario, each shopper can choose only to stockpile (‘S’), or not to stockpile (‘NS’).
2. If neither shopper stockpiles, the supermarket functions as normal and each shopper successfully purchases the goods they need.
3. If only one shopper stockpiles, but the other does not, then only the shopper that stockpiles is able to purchase any goods.
4. If both shoppers stockpile, then only one shopper successfully purchases any goods, i.e. it is equally likely for either shopper to get nothing.

Both shoppers realise they can achieve the same or a better outcome by stockpiling (represented by the upper-left quadrant in the matrix below). Comparing the first row with the second, Shopper 1 always achieves the same or a better ‘payoff’ by stockpiling, irrespective of Shopper 2’s actions. The same is true vice versa. In other words, they settle for the worst combination of outcomes possible.

A COVID-19 shopper’s dilemma. (x, y) denotes outcome x for Shopper 1 and outcome y for Shopper 2. I represent the outcome for each shopper as a figure between ‘1’ and ‘5’, with ‘1’ being the worst outcome and ‘5’ being the best outcome. If neither shopper stockpiles, they each maximise their payoff at ‘5’. If one shopper stockpiles but the other does not, the shopper that stockpiles has a payoff of ‘5’ and the other has a payoff of ‘1’. If both shoppers stockpile, they are each equally likely to receive nothing and I represent this as an average payoff of ‘3’. Comparing the first row with the second, Shopper 1 always achieves the same or a better outcome by stockpiling, irrespective of Shopper 2’s actions. If Shopper 2 stockpiles, then by also stockpiling he is better off (3 > 1). If Shopper 2 does not stockpile, then he is no worse off (5 = 5).

The prisoner’s dilemma is not isolated to our supermarkets. It also arises in other contexts relevant to this crisis:

• Wearing a face mask is known to stop the transmission of viral particles, but is less effective for preventing users from contracting the virus. In other words, people may choose not to wear a face mask because this is the most rational (albeit least socially optimal) outcome that minimises personal cost while overlooking the associated benefits that (mostly) accrue to others.
• Businesses eager to restart their operations may be motivated by commercial considerations and the actions of their competitors. While an extension to lockdown may be the most sensible solution from a public health standpoint, business owners who have suffered months of losses may be eager to reopen with the intention of recovering these losses, or even gain an edge on their competitors. Yet, if all businesses reopen prematurely and a resurgence of the virus transpires, none will benefit and almost certainly all will suffer.

What can we do to resolve this?

Acting in our own best interests but ignoring those of others is clearly not the way to navigate this crisis. When facing the prisoner’s dilemma, coordination and cooperation (with some degree of altruism) are necessary as a cure. Self-serving individuals are simply not predisposed to comply with crisis management and public safety measures, which require collective effort.

The silver lining is that most people are not selfish, ‘utility-maximising’ agents as classic economic models of decision-making often assume. Rather, we are conditional cooperators, and we care deeply about others. We also often care about what others think of us (more on the importance of this later).

It is crucial that we share the right information to create the necessary incentives for cooperation. While strict rules (such as limits on the number of items shoppers can purchase) are effective, it is helpful also to understand the ‘why’ of these policies and to have in place a clear mental framework of how our actions contribute to the wider strategy.

Often, simple enforcement mechanisms such as social disapproval can be powerful, cost-effective ways of shaping behaviour. Just as ‘herding’ reinforces undesirable behaviours, so it can be used to encourage desirable practices and deter non-compliance. Many low-cost ‘nudges’ have already been deployed during this crisis to promote public health, including:

• the 2-meter rule (or 1.5-meters in some countries), to encourage social distancing
• the elbow bump, to reduce physical contact
• singing the ‘Happy Birthday’ song to prolong hand-washing
• placing hand sanitiser dispensers in visible public locations with clearly marked signs.

Similar measures can be put into place to encourage social consciousness and promote empathy.

As we slowly emerge from our homes and readjust to our old routines, we would do well to consider how our actions affect the social collective. With a bit of care, and a little nudge, we are well placed to overcome our irrational ways.