Prisoners' Dilemma and Collective Action

 This lecture covers:

1. Prisoners' Dilemma - exploring the tension between cooperation and defection 
1. the tension is between individual preferences(defect) and socially preferred outcomes(coop)
2. they don't line up - Aristotle might have some insight into this - that the role of leadership is to remove tensions such as these.
2. Cooperation x7 - seven ways to get cooperation in a Prisoners' Dilemma
3. Collective Action Problems - Prisoners' Dilemma at scale
4. Common Pool Resource Problems - The No Panacea option.

The Prisoner's Dilemma

What is it

• Two Players
• Pareto Efficient - there's no way in which you make make every single person better off.
• Nash Equilibrium is DD

Where is it applied

• arms control, price competition, technological adoption, food sharing

People will tend to a bad outcome.

Cooperation x7

1. Repetition: Direct Reciprocity (Tit for Tat strategy)
2. Reputation: Indirect Reciprocity
3. Network Reciprocity
4. Group Selection
5. Kin Selection
6. Laws and prohibitions - e.g. illegal to talk on cell phones
7. Incentives - e.g. shovel sidewalk or get fined

Super Cooperators by Michael Novak.

Collective Action Problem / Free Rider Problem

Examples of Collective action Problem

1. Global Carbon Emissions
2. Fixing the flooding problem in the community (this is more of a Public Good problem)

An extension of the prisoners' dilemma problem where when I cooperate, lots of people benefit but when I defect, I will benefit alone.

The Model

Let Xj be the action of person j.
Xj is some amount of effort between 0 and 1 - how much we're contributing to the public good.

Payoff of j = -Xj + b*Sum(Xi | i from 1 to N)
b in (0,1)

Note that if b > 1, then we'll always contribute because Xj is 1 and regardless of what others do b*Xj is greater than 1.

Overconsumption followed by collapse.

Jared Diamond - Collapse

Common Pool Resource Problem

Examples of this include cows grazing in the commons, cod fishing or turkey hunting.

The Model

x[j] is amount consumed by j
X is total consumed
C is amount available

Amount Available Next Period:
    C[t+1] = (C[t] - X)^2


Solving Collective Action Problem and Common Pool Resource Problems

1. Particulars matter, for example:
1. Grazing in the Commons - the amount of grass is visible to all
2. OverFishing - the fish population is not visible so some form of monitoring is required
3. Upstream vs Downstream - focus more on upstream as they greatly influence outcomes

Eleanor Ostrom says particulars matter i.e. No Panacea