Real people (VI)

[…] Nash: See if I derive an equilibrium (link) where prevalence is a non-singular event where nobody loses, can you imagine the effect that would have on conflict scenarios, arm negotiations… (…) currency exchange? […], in Memorable quotes for “A Beautiful Mind” (2001), movie directed by Ron Howard, starring Russell Crowe, along with Ed Harris.

Over the Equilibrium Balance

Did you just mention privatization, “increase in productivity” and self-interest as a solution? Well, the answer depends a lot if you are in a pre or post equilibrium physical state. The distribution curve in question is more or less a Bell-curve. So maybe it’s time for all of us, to make a proper balance in here, having a brief look onto it from a recent scientific perspective.

Let us consider over-exploitation. Imagine a situation where multiple herders share a common parcel of land, on which they are each entitled to let their cows graze. In Hardin‘s (1968) example (check his seminal paper below), it is in each herder’s interest to put the next (and succeeding) cows he acquires onto the land, even if the quality of the common is damaged for all as a result, through overgrazing. The herder receives all of the benefits from an additional cow, while the damage to the common is shared by the entire group. If all herders make this individually rational economic decision, the common will be depleted or even destroyed, to the detriment of all, causing over-exploitation.

Video – “Balance“: Wolfgang and Christoph Lauenstein (Directors), Germany, 1989. Academy Award for Best Animated Short (1989).

This huge dilemma, know as “The tragedy of the commons” arises from the situation in which multiple individuals, acting independently and rationally consulting their own self-interest, will ultimately deplete a shared limited resource, even when it is clear that it is not in anyone’s long-term interest for this to happen. On my own time “self-interest” allow me to start this post directly with a key passage, followed by two videos and a final abstract. First paper below, is in fact the seminal Garrett Hardin paper, an influential article titled precisely “The Tragedy of the Commons,” written in December 1968 and first published in journal Science (Science 162, 1243-1248, full PDF). One of the key passages goes on like this. Hardin asks:

[…] In a welfare state, how shall we deal with the family, the religion, the race, or the class (or indeed any distinguishable and cohesive group) that adopts overbreeding as a policy to secure its own aggrandizement (13)? To couple the concept of freedom to breed with the belief that everyone born has an equal right to the commons is to lock the world into a tragic course of action. […]

So the question is: driven by rational choice, are we as Humanity all doomed into over-exploitation in what regards our common resources? Will we all end-up in a situation where any tiny move will drive us into a disaster, as the last seconds on the animated short movie above clearly and brilliantly illustrate?

Fortunately, the answer is no, according to recent research. Besides Hardin‘s work has been criticized on the grounds of historical inaccuracy, and for failing to distinguish between common property and open access resources (Wikipedia entry), there is subsequent work by Elinor Ostrom and others suggesting that using Hardin‘s work to argue for privatization of resources is an “overstatement” of the case.

Video – Elinor Ostrom: “Beyond the tragedy of commons“. Stockholm whiteboard seminars. (video lecture, 8:26 min.)

In fact, according to Ostrom work in the study of common pool resources (CPR), awarded in 2009 for the Nobel Prize in Economic Sciences, there are eight design principles of stable local common pool resource management, possible to avoid the present dilemma. Among others, one of her works I definitely recommend reading is her Presidential address on the American Political Science Association, presented back in 1997, entitled, “A Behavioral Approach to the Rational Choice Theory of Collective Action” (The American Political Science Review Journal, Vol. 92, No. 1, pp. 1-22, Mar., 1998). Her impressive paper-work starts like this:

[…] Extensive empirical evidence and theoretical developments in multiple disciplines stimulate a need to expand the range of rational choice models to be used as a foundation for the study of social dilemmas and collective action. After an introduction to the problem of overcoming social dilemmas through collective action, the remainder of this article is divided into six sections. The first briefly reviews the theoretical predictions of currently accepted rational choice theory related to social dilemmas. The second section summarizes the challenges to the sole reliance on a complete model of rationality presented by extensive experimental research. In the third section, I discuss two major empirical findings that begin to show how individuals achieve results that are “better than rational” by building conditions where reciprocity, reputation, and trust can help to overcome the strong temptations of short-run self-interest. The fourth section raises the possibility of developing second-generation models of rationality, the fifth section develops an initial theoretical scenario, and the final section concludes by examining the implications of placing reciprocity, reputation, and trust at the core of an empirically tested, behavioral theory of collective action. […]

Real people (V)

Computing Altruism

Book – Karl Sigmund, The Calculus of Selfishness, Princeton Series on Theoretical and Computational Biology, Princeton University Press,  ISBN: 978-1-4008-3225-5, 192 pp., 2009.

[…] Cooperation means that a donor pays a cost, c, for a recipient to get a benefit, b. In evolutionary biology, cost and benefit are measured in terms of fitness. While mutation and selection represent the main forces of evolutionary dynamics, cooperation is a fundamental principle that is required for every level of biological organization. Individual cells rely on cooperation among their components. Multicellular organisms exist because of cooperation among their cells. Social insects are masters of cooperation. Most aspects of human society are based on mechanisms that promote cooperation. Whenever evolution constructs something entirely new (such as multicellularity or human language), cooperation is needed. Evolutionary construction is based on cooperation. The five rules for cooperation which we examine in this chapter are: kin selection, direct reciprocity, indirect reciprocity, graph selection, and group selection. Each of these can promote cooperation if specific conditions are fulfilled. […], Martin A. Nowak, Karl Sigmund, How populations cohere: five rules for cooperation, in R. M. May and A. McLean (eds.) Theoretical Ecology: Principles and Applications, Oxford UP, Oxford (2007), 7-16. [PDF]

How does cooperation emerge among selfish individuals? When do people share resources, punish those they consider unfair, and engage in joint enterprises? These questions fascinate philosophers, biologists, and economists alike, for the “invisible hand” that should turn selfish efforts into public benefit is not always at work. The Calculus of Selfishness looks at social dilemmas where cooperative motivations are subverted and self-interest becomes self-defeating. Karl Sigmund, a pioneer in evolutionary game theory, uses simple and well-known game theory models to examine the foundations of collective action and the effects of reciprocity and reputation. Focusing on some of the best-known social and economic experiments, including games such as the Prisoner’s Dilemma, Trust, Ultimatum, Snowdrift, and Public Good, Sigmund explores the conditions leading to cooperative strategies. His approach is based on evolutionary game dynamics, applied to deterministic and probabilistic models of economic interactions. Exploring basic strategic interactions among individuals guided by self-interest and caught in social traps, The Calculus of Selfishness analyses to what extent one key facet of human nature–selfishness–can lead to cooperation. (from Princeton Press). [Karl Sigmund, The Calculus of Selfishness, Princeton Series on Theoretical and Computational Biology, Princeton University Press,  ISBN: 978-1-4008-3225-5, 192 pp., 2009.]

What follows comes partly from chapter 1, available here:

THE SOCIAL ANIMAL: Aristotle classified humans as social animals, along with other species, such as ants and bees. Since then, countless authors have compared cities or states with bee hives and ant hills: for instance, Bernard de Mandeville, who published his The Fable of the Bees more than three hundred years ago. Today, we know that the parallels between human communities and insect states do not reach very far. The amazing degree of cooperation found among social insects is essentially due to the strong family ties within ant hills or bee hives. Humans, by contrast, often collaborate with non-related partners. Cooperation among close relatives is explained by kin selection. Genes for helping offspring are obviously favouring their own transmission. Genes for helping brothers and sisters can also favour their own transmission, not through direct descendants, but indirectly, through the siblings’ descendants: indeed, close relatives are highly likely to also carry these genes. In a bee hive, all workers are sisters and the queen is their mother. It may happen that the queen had several mates, and then the average relatedness is reduced; the theory of kin selection has its share of complex and controversial issues. But family ties go a long way to explain collaboration. The bee-hive can be viewed as a watered-down version of a multicellular organism. All the body cells of such an organism carry the same genes, but the body cells do not reproduce directly, any more than the sterile worker-bees do. The body cells collaborate to transmit copies of their genes through the germ cells – the eggs and sperm of their organism. Viewing human societies as multi-cellular organisms working to one purpose is misleading. Most humans tend to reproduce themselves. Plenty of collaboration takes place between non-relatives. And while we certainly have been selected for living in groups (our ancestors may have done so for thirty million years), our actions are not as coordinated as those of liver cells, nor as hard-wired as those of social insects. Human cooperation is frequently based on individual decisions guided by personal interests. Our communities are no super-organisms. Former Prime Minister Margaret Thatcher pithily claimed that “there is no such thing as society“. This can serve as the rallying cry of methodological individualism – a research program aiming to explain collective phenomena bottom-up, by the interactions of the individuals involved. The mathematical tool for this program is game theory. All “players” have their own aims. The resulting outcome can be vastly different from any of these aims, of course.

THE INVISIBLE HAND: If the end result depends on the decisions of several, possibly many individuals having distinct, possibly opposite interests, then all seems set to produce a cacophony of conflicts. In his Leviathan from 1651, Hobbes claimed that selfish urgings lead to “such a war as is every man against every man“. In the absence of a central authority suppressing these conflicts, human life is “solitary, poor, nasty, brutish, and short“. His French contemporary Pascal held an equally pessimistic view: : “We are born unfair; for everyone inclines towards himself…. The tendency towards oneself is the origin of every disorder in war, polity, economy etc“. Selfishness was depicted as the root of all evil. But one century later, Adam Smith offered another view.An invisible hand harmonizes the selfish efforts of individuals: by striving to maximize their own revenue, they maximize the total good. The selfish person works inadvertently for the public benefit. “By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it“. Greed promotes behaviour beneficial to others. “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own self-interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages“. A similar view had been expressed, well before Adam Smith, by Voltaire in his Lettres philosophiques: “Assuredly, God could have created beings uniquely interested in the welfare of others. In that case, traders would have been to India by charity, and the mason would saw stones to please his neighbour. But God designed things otherwise….It is through our mutual needs that we are useful to the human species; this is the grounding of every trade; it is the eternal link between men“. Adam Smith (who knew Voltaire well) was not blind to the fact that the invisible hand is not always at work. He merely claimed that it frequently promotes the interest of the society, not that it always does. Today, we know that there are many situations – so-called social dilemmas – where the invisible hand fails to turn self-interest to everyone’s advantage.