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In a lecture by a Chinese CEO with a consulting background, I learned an effect called 剧场效应 (can be transliterated into 'theatre effect' in English) and I can explain that a bit in the following story:
In a theatre, a short man stands up to see the play (and no one can forbid him), and then the audience behind him should also stand up. And finally, everyone stands up in the theatre but no one can benefit from such a change.
This is an analogy of the same phenomena in society. For instance, we can see from the 996.icu project on GitHub that in China everyone tries to perform better than the others and survive. And because there are so many short men in China who cannot even survive if not try their best. Then almost all of the workers in China work very very hard(but more often not efficiently).
I don't know if such an effect is named theatre effect in English. Is there a name for this within research on psychology?
This is related to, but not exactly, the concept of the tragedy of the commons. The eponymous scenario deals with a village's common land, where farmers can bring their cows to graze for free. Every individual farmer can rationally act in their own self interest to take advantage of the free grass. But when every farmer in the village does this, the grass is over-grazed and the common is destroyed for everyone. Although every individual acts to improve their own situation, everybody is worse off in the end.
This is related to the "theater effect" in that each individual is rationally acting in their own best interest, but the end result is a worse outcome for everyone. It's somewhat distinct in that it doesn't exactly deal with the over-exploitation of common resources quite so explicitly, but there are a number of parallels.
This is also somewhat related to the prisoner's dilemma, in which two criminals are asked to testify against one another. If neither testify, both go to jail for 1 year; if one testifies and the other doesn't, one goes to jail for 5 years and the other does not go to jail; if both testify, both go to jail for 3 years. Both individuals can improve their situation by testifying, but only if the other one does not. This is similar to one individual in the theater standing up - they will get an advantage, but only if no one else does the same. Every individual has a personal incentive to stand up, but if everybody does so, they wind up in a worse situation than they started with, where everyone had the same view but was seated.
From the macro perspective, this is the so-called involution(or 内卷化) which is recently a hot topic in China. This should be a political problem in nature but can also be viewed from psychology, methinks, from the perspective of individuals.
Reference: From Revolution to Involution: State Capacity, Local Power, and [Un]governability in China.