Unit 11
Unit Content notes:
The “Tragic Game”
humans are interacting with nature in an unsustainable way.
We tend to over-harvest resources, destroy habitats, and pollute our environment (Pretty 2003).
Why? If we could all just cooperate, then we should be able to live in a sustainable way. Well, it’s not that simple, and to demonstrate this point, let’s play a game.
Often games are thought of as competitions between two individuals or two teams.
But what about when there is an option to cooperate? Here, we will explore a famous two-player game called the Prisoner’s Dilemma.
In this game, players are faced with two options: to compete or to cooperate. Depending on what each player does, there are different payoffs.
Imagine that the police capture two individuals suspected of a major crime. The suspects are taken into two separate rooms and interrogated. Each suspect has two options: to squeal on the other suspect (defect) or to not say anything (cooperate). If one player defects and the other cooperates then the defector gets no sentence (zero years) and the person who cooperated (said nothing but got squealed on) gets five years in prison. However, if both squeal on each other, they each get three years. And if both cooperate and don’t say anything, they each get one year.
The options for Player A are on the left column in blue and the options for Player B are on the top row in purple. Depending on the combination of choices between both players, there are four different payoffs, and each payoff in one of the four boxes corresponds to the players’ colour. For example, if Player A chooses to cooperate and Player B chooses to defect, then the payoff is five years in prison for Player A and zero years for Player B.
The Evolution of Cooperation
Applying the Prisoner's Dilemma matrix to biology has been used to explain how cooperation--when individuals can seem to act against their self-interest--evolved in the natural world.
While a single round of the Prisoner's Dilemma game suggests that acting selfishly is the rational choice, over multiple rounds, cooperating is better for everyone.
In a biological scenario, this can translate to, for example, a bat sharing its meal with a neighbour who didn't forage successfully--even though it means they have a bit less food in the short term.
Many factors affect how the Prisoner's Dilemma applies to biological populations, which means that it is still part of an ongoing debate.
The Tragedy of the Commons
The Tragedy of the Commons is a concept proposed by Garret Hardin (1968).
The commons is any resource that is held or used in common by multiple users who are not the owners.
Examples of common resources include oceans, rivers, surface and groundwater, fisheries, wildlife, range, forests, parklands, and air (Feeny et al. 1990). Hardin (1968) proposes the Tragedy of the Commons in this way:
Picture a pasture open to all. It is to be expected that each herdsman will try to keep as many cattle as possible on the commons. Such an arrangement may work reasonably satisfactorily for centuries because tribal wars, poaching, and disease keep the numbers of both man and beast well below the carrying capacity of the land. Finally, however, comes the day of reckoning, that is, the day when the long-desired goal of social stability becomes a reality. At this point, the inherent logic of the commons remorselessly generates tragedy.
As a rational being, each herdsman seeks to maximize his gain. Explicitly or implicitly, more or less consciously, he asks, "What is the utility to me of adding one more animal to my herd?" This utility has one negative and one positive component.
The positive component is a function of the increment of one animal. Since the herdsman receives all the proceeds from the sale of the additional animal, the positive utility is nearly +1.
The negative component is a function of the additional overgrazing created by one more animal. Since, however, the effects of overgrazing are shared by all the herdsmen, the negative utility for any particular decision-making herdsman is only a fraction of 1 [1 divided by the number of herdsmen].
Adding together the component partial utilities, the rational herdsman concludes that the only sensible course for him to pursue is to add another animal to his herd. And another, and another… But this is the conclusion reached by each and every rational herdsman sharing a commons. Therein is the tragedy. Each man is locked into a system that compels him to increase his herd without limit--in a world that is limited. Ruin is the destination toward which all men rush, each pursuing his own best interest in a society that believes in the freedom of the commons. Freedom in a commons brings ruin to all.
What are your first thoughts when you read Hardin's words? Although he presents this concept as a statement of fact, how do you think his words (both literally, like the use of the default masculine, as well as figuratively with his notion that individuals are inherently selfish) reflect an ideological bias?
Hardin's concept suggests a tragical inevitability in a world where controlling access to common resources (e.g., rivers, migratory animals, vast stretches of land) is often very difficult, if not impossible (Feeny et. al 1990).
Add to that the fact that when anyone uses a common resource, this negatively affects others' ability to use that same resource (Feeny et. al 1990, Manning 2007).
According to Hardin's conception, the subtractability (or rivalry) between users further drives them toward inappropriate use of the resource.
However, the Tragedy of the Commons came out over 60 years ago and there has been some pushback since then.
Ostrom et al (1999) have updated Hardin's concept with real-world examples of cooperation and future directions for sustainable management of shared resources.
By cooperating, the resource is preserved. However, because each individual never knows what the other individual will do, then the optimal move is to always defect, which results in some payoff--though nobody achieves the maximum payoff.
If you look around you, you can find many examples that support Hardin’s concept, whether it be the messy kitchen or common area in a shared residence or the cod stocks off the shores of Canada.
Indeed, when you extrapolate these ideas to global issues of environmental degradation and pollution, our future seems very gloomy (Kaitala and Pohjola 1995).
Cooperation and Games
Hardin said that the only way we could save common resources from destruction was either by converting them to private property or by having government regulate them (Hardin 1968).
Hardin implies that only these two property regimes provide the necessary incentives or controls to use the resource in a sustainable way (Feeny et al. 1990).
However, since Hardin’s paper, a number of other authors have found many cases in which people on a local scale have been able to self-regulate and use a common resource sustainably; herders using common pasture, fishing communities harvesting fish stocks, farmers sharing water for irrigation are examples of this (Dietz et al. 2003, Feeny et al. 1990, Pretty 2003).
In a series of computer simulations in which different pre-determined strategies played against each other, Axelrod and Hamilton (1981) found that the strategy that maximized the payoff in a repeated Prisoner’s Dilemma game was called “tit-for-tat”. This strategy has three main properties:
It’s nice, meaning that if the other player cooperates in one round, the first player will start to cooperate in the next round.
It’s retaliatory, meaning that if the other player defects in one round, then the other player will defect in the next round.
It’s forgiving, meaning that the strategy has no long-term memory of defection by the other player. Subsequent studies on animals have provided evidence that species that cooperate actually do follow this strategy.
Thus, if humans use this strategy, then one solution that would simulate multiple encounters between individuals, groups, or countries is to form organizations where agreements can be put into place.
Solving Environmental Problems
There is no straightforward association between cooperation and how property rights are distributed, since communal, private, and government ownership have all been associated with both success and failure (Dietz et al. 2003, Feeny et al. 1990).
What has been demonstrated is that when threatened with complete resource degradation, social groups often can change their behaviour and self-regulate effectively (Dietz et al. 2003, Feeny et al. 1990).
Achieving cooperation and reaching effective agreements is certainly difficult, and even more so on an international scale (Finus 2000, Kaitala and Pohjola 1995, Ward 1996).
This does not deter people from trying to find a solution, including by using game theory.
By applying their theories and models to global climate change, game theorists try to predict the outcomes of various possible global warming agreements and scenarios (Carraro and Siniscalco 1995, Finus 2000, Kaitala and Pohjola 1995, Ward 1996).
Scientists have found that there is not one particular type of agreement that will solve our environmental problems (Finus 2000, Kaitala and Pohjola 1995, Ward 1996). Although some scenarios could potentially work, they also could fail if some parties opt to freeride (enjoy the clean environment provided by others' emission reduction without paying the cost) or cheat (agree to reduce emissions but then not live up to the agreement) (Carraro and Siniscalco 1995, Finus 2000).
What game theory does clearly demonstrate, however, is that cooperation among all parties leads to the greatest payoff for everyone (Carraro and Siniscalco 1995, Dawkins 2006, Finus 2000). Exactly how to get unanimous cooperation is what remains unclear.
Approaches to global cooperation are numerous.
Top-down scenarios for successful international climate change agreements include options such as compensation or transfer payments to distribute wealth, the possibility of sanctions and their enforcement, the feasibility of linking one agreement to another, more stable and more profitable agreement, monitoring compliance, emission quotas, pollution taxes, tradeable credits, and permits (Finus 2000).
In contrast, Pretty (2003) takes a bottom-up instead of a top-down approach. Her idea is that lifestyle choices and changes we make in our own lives influence our peers, which then propagates through social networks until change is effected at a large scale (Pretty 2003). Pretty states that "social bonds and norms are critical for sustainability" and that social bonds ensure that "people have the confidence to invest in collective activities, knowing that others will do so too."
Since the 1990s, close to half a million groups have been established worldwide for collective resource management, encompassing the management of watersheds, forests, irrigation, wildlife, fisheries, and even microfinance.
These sorts of groups, based on collective agreements at the individual level, may offer a route to managing and governing common resources sustainably (Pretty 2003).
Although the exact way we will solve our global environmental problems remains unclear, we can look back and learn from our past successes and current efforts.
The Montreal Protocol
The Earth's atmosphere contains a layer of ozone that filters out ultraviolet (UV) radiation (UNEP 2008).
UV radiation can cause skin cancer, eye cataracts, damage to the immune system, lower production of food crops, and reduced plankton levels in the oceans (UNDP Date unknown).
The ozone layer is essential to life on the planet (UNEP 2008).
In the 1970s, scientists discovered that human-made chemicals being released into the atmosphere were destroying the protective ozone layer (UNEP 2008).
In fact, a hole in the ozone layer formed over the Antarctic (UNEP 2008, Finus 2000). As a consequence of this dangerous situation, 192 countries of the estimated 196 countries in the world signed the Montreal Protocol on Substances that Deplete the Ozone Layer in 1987 (Rosenberg 2011, UNEP 2008, Welch Date unknown).
This agreement aimed to reverse past damage to the ozone layer by phasing out the use of damaging substances (UNEP 2008).
The Montreal Protocol worked, as levels of ozone-depleting substances in the atmosphere are declining or leveling off (UNEP 2008). If commitment to the agreement remains high, it is estimated that global ozone levels in the polar regions will recover to the pre-1980 values by 2050 (UNEP 2008).
A former Secretary-General of the United Nations UN), Ban Ki-moon, has said that "the success of the Montreal Protocol shows us that there are global instruments that can help curb the impact of human activities on the global environment.
We should draw lessons from this experience, and strive to replicate it” (UNDP 2005 Aug 26).
The United Nations' Sustainable Development Goals
The UN is a prime example of long-standing international cooperation (UN 2009). Formed in 1945, it is “committed to maintaining international peace and security, developing friendly relations among nations and promoting social progress, better living standards and human rights” (UN 2011).
With 193 members, the UN includes nearly every country in the world (UN 2011).
The UN is central to global efforts to solve problems that challenge humanity on a global scale.
Under the umbrella of the UN, work is done to promote respect for human rights and gender equality, protect the environment, fight disease, and reduce poverty.
Today, the UN is a global force bringing countries together to act on 17 Sustainable Development Goals.
In the past, humans lived in small communities that were much more isolated than today.
The scale of our problems was local, and so were our solutions. Today, we live in a global community and we face global-scale problems.
Whether top-down or bottom-up, our solutions will ultimately be global as well.
Key Terms and Concepts:
Computer simulation, cooperate, defect, payoff, Prisoner’s Dilemma, tit-for-tat strategy, Common resources, Tragedy of the Commons, unsustainable, Bottom-up approaches, cheating, free ride, game theory, Montreal Protocol, ozone layer, top-down approaches, United Nations
Prisoners Dilemma Game Theory: Unveiling Strategic Decision-Making notes
The Prisoner’s Dilemma explores the tension between cooperation and competition.
Two prisoners must decide between cooperating with each other or betraying the other.
The dilemma highlights how decision-making can lead to suboptimal outcomes even when acting in self-interest.
The Iterated Prisoner’s Dilemma introduces repeated interactions, adding complexity to strategic behavior over time.
It shows how the prospect of future interactions can influence current decisions.
The framework helps analyze real-world issues like price competition, collusion, and cooperation in competitive settings.
The Prisoner’s Dilemma demonstrates the conflict between self-interest and collective benefit.
Repeated games in the Iterated Prisoner’s Dilemma introduce the potential for strategy and reciprocity.
Understanding these models can shed light on the dynamics of competition and cooperation in economic markets.
The Classical Prisoner’s Dilemma involves strategic choices leading to various outcomes like jail time, payoff, and punishment.
If both prisoners remain silent, each serves 1 year in prison with mutual trust preserved.
If one confesses, they serve 0 years, while the other serves 20 years.
If both confess, both serve 5 years.
Repeated simulations allow decisions to build on each other, creating potential strategies over time.
Mutual cooperation or betrayal mirrors real-life social interactions and behaviors like reciprocal altruism in animals.
In the classical version, cooperating offers a better outcome but is overshadowed by fear of betrayal.
The dilemma highlights how rational individuals may fail to cooperate, despite it being in their best interest.
Practical applications include business scenarios, market competition, group projects, and decision-making involving trust.
In Iterated Prisoner’s Dilemma, repeated interactions encourage cooperation as players form strategies based on past actions.
Communication is typically prohibited, making trust and collaboration difficult, and snitching offers tempting defection outcomes.
In a reliable legal system, cooperation may become more rational due to severe consequences of defection.
In markets, repeated interactions can reduce defection incentives, building long-term relationships and trust.
The "Tragedy of the Commons" occurs when self-interest leads to collective resource depletion, similar to price competition.
In monopolistic competition, self-interest may lead to price wars, reducing profits for all players.
As market concentration increases, firms may form cartels to control prices, leading to less competition.
The evolution of cooperation in animals shows social behaviors like hunting in packs and altruistic defense that benefit the group.
Altruism enhances group fitness, offering a nuanced understanding of evolution beyond strict Darwinian selfishness.
Reciprocity explains cooperative behavior between unrelated individuals, based on mutual give-and-take.
Reciprocal relationships contribute to non-zero-sum games, where all participants benefit, unlike zero-sum interactions like predator-prey dynamics.
Engaging with competitors constructively can create a non-zero-sum environment, growing the market for everyone involved.