Lately I've been seeing a lot of ethical questions, policy decisions,
etc, as being "prisoner's dilemmas" or "tragedies of the commons",
including the question of voting (and including some Grex policy questions.)
So I described these two little social science models for the group--a lot
of folks are already familiar with them--and as I had hoped, everyone had
interesting ideas of how to various real-world situations to these models.

The prisoner's dilemma runs as follows:  Two criminals are captured and
held in separate cells.  The police tell each one:  If neither of you
confess, we won't be able to convict you, so we'll get you both on a lesser
charge, and you'll each serve one year.  But we want a conviction, so if you
confess, implicating the other guy (male criminals) and he doesn't confess,
we'll let you go, and give him 5 years.  But if you both confess, then you'll
each get 3 year sentences.  So, each criminal is unsure of what the other
will do.  And their reasoning runs thus:  Suppose the other confesses, then
what is my best option?  I should confess, because that gives me 3 instead
of 5.  Suppose the other doesn't confess?  Again, my best choice is to
confess, which gives me 0 instead of 1.  Clearly confessing is the best
choice.  Each one therefore confesses, and they each get 3 years.  The irony
is that they *could have done better.*

This little scenario was dreamed up by some mathematicians at the RAND
corporation.  The guys who built the atomic weapons invented the science
of game theory in their spare time.

The tragedy of the commons is sort of a variation, involving how to utilize
a public resource.

My view is that a lot of "dilemmas" can be solved with property rights, and
markets, such that people pay the right costs and receive the right benefits.
For example--this was brought up in discussion--when a forest is *owned*
by a company, which wants to maximize profits over a long planning period,
it may be preserved and conserved much better than if it is administered
by some corrupt bureaucrats, "for the public good."

Incidentally, you are supposed to sort of be on the side of the criminals,
above, and wish they could cooperate with each other to get off with only
1 year sentences.  But such lack of cooperation might actually be in the
public interest.  Suppose the players of the game are oil companies which
would like to collude to keep prices high, but cannot, because of the
temptation to defect by lowering prices.

6 responses total.

Nat, do a "join agora15" and "read 90" to see my big item on the Tragedy of
the Commons from last year.  It was a pretty good discussion.

The prisoner's dilemma is easier to understand if you have the grid:

                    A Doesn't Confess     A Confesses
                  +-------------------+------------------+
                  |                   |                  |
B Doesn't Confess |  A: 1  /   B: 1   |  A: 0  /   B: 5  |
                  |                   |                  |
                  +-------------------+------------------+
                  |                   |                  |
B Confesses       |  A: 5  /   B: 0   |  A: 3  /   B: 3  |
                  |                   |                  |
                  +-------------------+------------------+

Whatever A does, B is always better off if he confesses.
Whatever B does, A is always better off if he confesses.

So both confess, and both lose out, because if neither had confessed
  they would have all been much better off.

I like Nat's point about the fact that this is exactly what (in theory)
prevents price fixing in capitalist economies.  So sometimes it is the
friend of society.  But it is also the engine driving the tragedy of the
commons, encouraging people to abuse collective resources.  In this case
it is very dangerous to society.

So is there a simple way to distinguish good PDs from bad PDs in capitalist
economies?

This response has been erased.

Agora15, item 90 is something about MacDonaldization of America--is
that the item you mean?

Another prisoner's dilmma:  Highway safety.  If everyone drove a Festiva,
I'd be a lot safer in *my* Festiva.  But if I drive a Festiva and you drive
something big, then you will be even safer, but I'll be at greater risk.
So at some point when I decide I can afford it, I'll get something bigger,
in self-defense, and then you will no longer be as safe, relative to me, and
we'll both be worse off.  (Actually, we'll be somewhat better off, as far
as safety goes--I think a world of all-big cars is safer than a world of
all small cars.  But the total increase in safety is less than the
individual increase in safety perceived by a any single decision maker.  So
we are probably paying more than we have to or want to, for whatever
added safety we get.)

Solution:  Tax the hell out of big cars.  People who really want extra
safety at my expense can pay for it.  Use the money to compensate me for
incurring extra risk, and to reward me for driving a small car and therefore
posing less risk to others.  (There are other social costs to big cars, too,
and those costs could also be included the per-pound tax rate.  Social costs
of burning gas should be reflected in higher gas taxes.)

Whoops, that should be "join agora14" and "read 90".  Sorry.  Thought I
double checked that reference.  The title is "Tragedy of the Commons"

The extra safety cost shows up in auto insurance rates.  You pay higher rates
because you incurred more medical risks in your little car.  The big cars pay
lower rates because it costs us all less to fix the people up after an
accident.  
However, we all pay obscenely low rates for gasoline.  A bigger tax on them
would cover the increased social cost of pollution and single-occupancy
vehicles.  

Well, Agora14, item 90 has some very interesting stuff.   Jan, you think like
an economist.  (A nice, sensible economist, with a sense of humor, I mean)
I was going to use that making traffic worse by building a bridge example to
argue my point about having to charge for email.  You already grasp all my
arguments, but have reached a different conclusion.

As for pricing of insurance--that's a wonderful can of worms.  Maybe I'll
dive into that a little later.  (Oh, yuck--watch out when you mix your
metaphors!)

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