Introduction to Public Choice Theory

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Introduction to Public Choice TheoryBy Leon FelkinsWritten Jan. 10, 1997Latest revision: November 8, 2001"Everybody's business is nobody's business." -- Russell Hardin, Collective Choice, 1982.

The social phenomena discussed in this series of essays all center around the problem of individuals in groups faced with the choice of doing what is best for themselves or what is best for the group. Instances of the phenomena are called by many different names: "Volunteer's Dilemma", "Prisoner's Dilemma", "Collective Choice", "Rational Choice", "Social Choice", and "Voter's Paradox" to list just a few. Unfortunately, the academic programs that cover these various manifestations of the "individual vs. group" dilemma do not fall under one discipline. You will not find the "Social Dilemma" department at any university.[1] But you can specialize in certain aspects of the general problem by signing up in the Political or Economics departments (and possibly others). In particular, some universities now offer an advanced degree specializing in what is called Public Choice Theory, (e.g., George Mason University), and several offer specialization in "Political Economics", (e.g. University of Washington and University of Michigan).

Public Choice Theory is directed toward the study of politics based on ecomonic principles. I would think you would be immediately puzzled by this, since most universities already have a Political Science department. The problem is that until Public Choice Theory came along, universities did not teach the way politics actually functions but, instead, taught the way it should work ideally or the way they wished it would work. This practice of teaching what should be (normative theory) rather than what is (positive theory) is fairly common at universities and continues to this day at most universities in politics as well as other disciplines. Fortunately, if you look carefully, you can find some universities that teach the facts about politics, to the best of our abilities to understand it, and that discipline is called Public Choice. I should point out that Public Choice is actually more general than just politics, but that is its main emphasis.

Let us examine various aspects of the theory. "We do it just for you!", per Ronald McDonaldWell, not really. Politicians do not devote their lives for yours and my benefits anymore than McDonalds does. Strangely, however, many people think so -- including university professors that teach politics and philosophy. The most important contribution of Public Choice Theory is that it recognizes that politicians are motivated by self interest -- just like you and me. In fact, more so than you and me! If that is so, and it is, then our expectations of politicians changes dramatically. One point worth noting here is that the Founding Fathers of the U.S.A. understood that and they tried to organize government in such a way as to minimize the impact of self interest. They did a good job and the fact that we are having so much trouble with our government today results from our losing sight of the reality that politicians are self-interested.

To summarize this most important aspect of Public Choice Theory, I will quote a paragraph from an essay by Paul Starr, "The Meaning of Privatization": "Public choice," ill-named because the only choices it recognizes are essentially private, is both a branch of microeconomics and an ideologically-laden view of democratic politics. Analysts of the school apply the logic of microeconomics to politics and generally find that whereas self-interest leads to benign results in the marketplace, it produces nothing but pathology in political decisions. These pathological patterns represent different kinds of "free-riding" and "rent-seeking" by voters, bureaucrats, politicians, and recipients of public funds. Coalitions of voters seeking special advantage from the state join together to get favorable legislation enacted. Rather than being particularly needy, these groups are likely to be those whose big stake in a benefit arouses them to more effective action than is taken by the taxpayers at large over whom the costs are spread. In general, individuals with "concentrated" interests in increased expenditure take a "free ride" on those with "diffuse" interests in lower taxes. Similarly, the managers of the "bureaucratic firms" seek to maximize budgets, and thereby to obtain greater power, larger salaries, and other perquisites. Budget maximization results in higher government spending overall, inefficient allocation among government agencies, and inefficient production within them. In addition, when government agencies give out grants, the potential grantees expend resources in lobbying up to the value of the grants--an instance of the more general "political dissipation of value" resulting from the scramble for political favors and jobs.

Another useful summary of Public Choice Theory is presented in the following paragraph quoted from "PUBLIC CHOICE AND BUREAUCRACY" (author not identified): It is the behaviour of public sector bureaucrats which is at the heart of public choice theory. While they are supposed to work in the public interest, putting into practice the policies of government as efficiently and effectively as possible, public choice theorists see bureaucrats as self- interested utility-maximizers, motivated by such factors as: "salary, prerequisites of the office, public reputation, power, patronage...and the ease of managing the bureau." (Niskanen, W.A. Bureaucracy: Servant or Master? (London: Institute of Economic Affairs, 1973)).

At the heart of all public choice theories then is the notion that an official at any level, be they in the public or private sector, "acts at least partly in his own self- interest, and some officials are motivated solely by their own self-interest." (Downs, Anthony Inside Bureaucracy (Boston: Little, Brown and Company, 1967)). For Downs, broader motivations such as pride in performance, loyalty to a programme, department or government, and a wish to best serve their fellow citizens may also affect a bureaucrat's behaviour, and the level to which self-interest plays a role in decisions is different for each of five bureaucratic personality types that he identifies. For Niskanen, self- interest is the sole motivator.

Some History of Public Choice TheoryJames Buchanan, (winner of the Nobel Prize in Economic Science, 1986, for work in Public Choice) and Gordon Tullock are credited with being the primary developers of Public Choice Theory. Their book, Calculus of Consent, published in 1962, is still considered the classic piece on this subject. To learn more about the history of Public Choice, see an interview of James Buchanan, himself, available on the internet. I will quote a couple of interesting passages:

Tullock and I considered ourselves to be simply taking the tools of economics, looking at something like the structure of American politics in the way James Madison had envisioned it. That is, it was clearly not a majoritarian democracy, which would be the parliamentary model (which was the ideal, at that time especially, of all the political scientists), rather it was a sort of a constitutional structure. We were the first to start analyzing the Constitution from an economic point of view. There were other people who analyzed particular voting rules, like majority voting, but we put that in a constitutional structure and provided an argument for choices among voting rules. We concentrated on that. So, in a sense, I considered us to be simply writing out in modern economic terms more or less Madison's framework of what he wanted to do, as opposed to anything new and different. It turned out that nobody had looked at it in that way. And:

[Public Choice] is nothing more than common sense, as opposed to romance. To some extent, people then and now think about politics romantically. Our systematic way of looking at politics is nothing more than common sense.

I completely agree with that statement! Apparently common sense is in short supply at the universities for it took until the 1950s and 1960s for them to discover what is evident to most citizens and, in particular, had been commented on by philosophers, humorists, and cynics[2] for many years prior to this academic "discovery".

The Back of the "Invisible Hand"In The Wealth of Nations Adam Smith postulated the concept of an 'invisible hand' that would lead individuals to further the common interest through the pursuit of their own self-interest. The success of the free market of private goods, compared to the failure of socialism's controlled distribution of private goods, is a strong demonstration of this concept. To extend the "invisible hand" concept to public goods, however, is a mistake -- a mistake easy to make because so many at the universities and in the news media deny the success of the free market concept! That is, the fact that the free market works so well with private goods when many academics discredit it is no reason to conclude that the academics are also wrong with regard to their belief that the free market will not be successful with public goods.

A good exposition of the myth that the free market somehow will also solve the problem of the distribution of public goods is found in the chapter titled, "The Back of the Invisible Hand" -- from which I got my heading for this section -- in the book by Russell Hardin, Collective Action. He says, "One may sense, however, that all too often we are less helped by the benevolent invisible hand than we are injured by the malevolent back of that hand; that is, in seeking private interests, we fail to secure greater collective interests. The narrow rationality of self-interest that can benefit us all in market exchange can also prevent us from succeeding in collective endeavors."

That is, the pursuit of self interest magically promotes the common interest when we are dealing with private goods, but it usually does not when we are dealing with public goods. Why this is so is the primary subject of this series of essays, the "Social Dilemmas", which I encourage you to read. One example will suffice here to illustrate the phenomenum.

Consider the fisheries and the ocean and assume that the collection of fish in the ocean is a "public good". What is the economic motivation for each fisherman? To take all he can, right? For, if a consceintious fisherman says to himself, "This is no good, grabbing all we can. I will limit my fishing, which I hope others will do the same, so as to preserve the fishery for the long term.", he will just lose for the other fishermen will continue with the over-fishing. So, to maximize his own return, he grabs all he can and so do the others. The fishery collapses from over fishing.

That this does not happen in the market of private goods is routinely demonstrated at the university in courses on Economics or, better yet, the local shopping mall.

For more on the concepts of public goods vs. private goods, I recommend the essay, "Public Goods & Club Goods", by Patrick McNutt.

Some Other Aspects of Public Choice TheoryWhat are some of the other aspects of collective activity that Public Choice Theory covers?

Constitutional, Democratic GovernmentPublic Choice theorists attempt to examine the system of government in which the people governed define their government by means of a constitution. The successes and failures of this concept are examined in detail.

VotingMuch attention has been given in the Public Choice field to the problem of voting. The simple approaches currently used have been shown to be defective as they do not always achieve the desired results. Alternative voting methods are examined and evaluated. Unfortunately, it has been difficult to modify our voting methods to reflect this knowledge.

Professor Donald G. Saari has some interesting papers online on this subject on his page, "Preprints and recent papers of Donald G. Saari on Voting and Social Choice".

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Political ManipulationsPublic Choice scholars have looked at the ways politicians interact with each other, the voters, and their supporters to achieve their own goals. Vote-trading, "log-rolling", wealth transfers, etc. are a few of the methods they use to obtain their own selfish ends -- and, occasionally, the wants of the citizens.

Rent-SeekingPublic Choice has much to say about the use of rent-seeking, which is the act of obtaining special treatment by the government at the expense of the rest of us.

The Realities of CollectivesFinally, Public Choice scholars examine the options involved with solving the many social dilemmas resulting from living in groups or collectives. We know that private enterprise is not a good solution to the problem of the distribution of public goods. From that you cannot conclude that government can do the job better (in spite of the fact that many "scholars" do come to that conclusion!). Public Choice scholars address the challenge of determining what is the best "of the imperfect solutions".

To Learn MoreAn excellent place to start is the on-line book, UNDERSTANDING DEMOCRACY: An Introduction to Public Choice listed in the Reference section below. After that, you should take a look at the classic: The Calculus of Consent by Buchanan and Tullock.

For an alternative and critical view of the successes and failures of the theory, consult the book by Green and Shipiro, Pathologies of Rational Choice Theory.

The Public Choice Society is now online. There you will find current happenings in the academic community and a link to the table of contents for the Public Choice Journal.

Information on the The European Public Choice Society is online.

Cl醬dio Djissey Shikida (his home page) has some interesting stuff.

You can get an advanced degree specializing in Public Choice at the George Mason University.

Notes:1. If physics were taught with the same lack of organization, you would have to go to one department to study gases, another to study fluids, and another to study solids. For another example of the lack of centralization, consider the early days of computers. When computer science first hit the universities, it was often covered by several departments; Business, Engineering, Mathematics, etc. It took awhile before the courses were (mostly) consolidated under one department.

2. See books and/or articles by Mark Twain, H. L. Mencken, and Will Rogers, for example.

References:Kelley L. Ross, Ph.D. : "Rent-Seeking, Public Choice, and The Prisoner's Dilemma", on the net at http://www.friesian.com/rent.htm

J. Patrick Gunning: "Public Choice, Public Goods, and Constitutions", on the net at http://http://www.gunning.cafeprogressive.com/demo/workpape/pbchpbgd.htm

J. Patrick Gunning: UNDERSTANDING DEMOCRACY: An Introduction to Public Choice. A complete book on Public Choice on-line! It is located at: http://www.fortunecity.com/meltingpot/barclay/212/votehtm/cont.htm

Links to other Public Choice sites, pictures and brief biographies of famous political economists, list of his books and essays, and other material are provided by Dr. John M. Cobin at his site at "Policy of Liberty".

Some introductory material on Political Economics is provided by Dr. Robert Schenk online at the "The Government and Economic Efficiency" page.

Buchanan, James M., and Gordon Tullock. The Calculus of Consent: Logical Foundations of a Constitutional Democracy. Ann Arbor: University of Michigan Press, 1962.

Donald P Green and Ian Shapiro. Pathologies of Rational Choice Theory. New Haven. Yale University Press. 1994.

Russell Hardin. Collective Action. Baltimore. Johns Hopkins University Press. 1982. Other references are identified at the end of the Voter's Paradox essay.

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关键词：introduction troduction Choice Public Theory Theory introduction Public Choice

The Voter's ParadoxBy Leon FelkinsWritten 10/14/95Revised 8/19/00

Introduction

"No snowflake in an avalanche ever feels responsible." -- STANISLAW LECIt is said that society is in a moral crisis. And, what is worse, it seems to be deteriorating at an ever increasing rate. We all agree that something needs to be done. Our politicians and preachers say we need to help each other more, we need to have "family values", we need to contribute to society and we need to have high moral standards. But there is a fundamental reason why none of this is going to happen. That reason may be a paradox for which there is no answer. This essay will serve as an introduction to this fascinating social problem which I will call the "Voter's Paradox". [1]

A few nights ago, my wife and I were driving along one of the lesser traveled highways. We came upon a person with a broken down vehicle in obvious distress. My wife said, "Maybe we should help". But I said, "I think not - it is not worth the risk". She responded, "But what if someday you were stranded and needed some help. Wouldn't you want someone to stop?"

Her reasoning is noble and her attitude is just exactly what our society needs. But her logic is faulty.

It is faulty on at least two counts. First off, my wife and I personally had much to lose and little to gain by helping this person. There would likely be time and expense involved to us in getting the stranger's car going again. And, there was some risk in that we could have been harmed by the person. The only practical reward for all this was a possible future gain of being helped in a similar situation.

And that brings us to the second fault; how is the recipient of our compassion going to spread the word to the population that the two of us are compassionate people (so that we might be rewarded someday when we need help)? Of course, it would not happen. Helping this person would have no effect on our chances of ever receiving similar help in this large anonymous society we now live in.

That example illustrates a phenomenon that is ubiquitous to our society.

When an individual has reason to contribute to what is basically a group activity in which the benefits of the group activity are shared by the group, certain puzzling phenomena are evident that can only be described as "diabolical". While there is no generally accepted terminology for these phenomena, various manifestations are often referred to as the "Voter's Paradox", the "Volunteer's Paradox", "Collective Action problems", the "Tragedy of the Commons", "Many-Person Prisoner's Dilemma", etc., or, in general, the "Social Dilemmas". The well known, two-person, "Prisoner's Dilemma" is just a special case of the "Social Dilemmas".

In this essay, these social phenomena, which Garrett Hardin described (see References at end of this essay) as "problems that have no technical solution" (a nice way of saying it is a paradox) and other such problems belonging to the "social dilemmas" (SD), will be represented by one term -- "The Voter's Paradox" (VP). The "Voting Paradox", seems to be an excellent representation of a wide variety of Social Dilemmas.

The definition for "paradox" used in this essay is "a person, situation, act, etc. that seems to have contradictory or inconsistent qualities" from Webster's dictionary. Basically, what we have are two apparently contradictory truths in the same phenomenon.

One reason that the Voting Paradox is a good candidate to represent Social Delimmas in general is that it seems to be a double paradox! The first can be expressed as, "while it is true that a particular personal endeavor would return a benefit to all members of the group such that all individuals would receive rewards that, in totality, more than compensate for that individual's contribution, it is also true that that particular individual would receive an even greater net return by not contributing anything!". I will call this the "freerider" aspect. This aspect of the phenomena is consistent with a related dilemma, the "Prisoner's Dilemma" which has received much study and is well reported in the scientific press (see the associated article, "Prisoner's Dilemma").

The second paradox is that, "while it is true that the outcome of a group effort is made up of the sum of the individual efforts, in many cases a particular individual's contribution makes no significant and/or measurable impact on the outcome". I will call this the "my vote doesn't count" aspect.

I will go into more detail on the Voting Paradox, in particular, in the Examples section.

Is Rationality the Problem?

"What is rational is real; And what is real is rational". -- HegelThe basis for the social dilemmas is rationality. So, what do we mean by "rationality"?

First, it is considered to be rational for individuals to look after their own best interests. It is hard to imagine that a free individual can do anything else. Now, we know that a computer or robot performs actions without any such "self-interest" motivation. A robot simply does what it is told to do. I suppose a human could also be in a robotic state also, in which case there would be no need for self-interest motivation.

Hopefully, most of us cannot be described as robots although it sometimes seems that way when you see people mindlessly spending their money for useless products just because a TV salesperson suggests it. Further, a case can be made that people who mindlessly accept directions from others, that is meme-driven people, of which the trend seems to be more of every day, are not much more than robots.

But for those of us who have not totally succumbed to the euphoric state of the meme-controlled mind, and who still have to make decisions continuously throughout the day, rational self interest has to be the criteria (but maybe we humans are not always rational. See my essay, "Humans are Rational, aren't they?"). Even a person who claims to be an altruist will admit that the reason she wants to help other people is that it makes the her feel good, and therefore, is performing a selfish act.

A person who gives her money to a robber has the choice of parting with the money or possibly her life. Choosing life over money is a rational self-interested decision.

With regard to the social dilemmas, the choice is between looking after one's own interest or looking after a large, often anonymous, group's interests. The problem is complicated by the disproportionate impact that the contribution might make between giving it to yourself or the group. For example, maybe I could send in a $1,000 to President Clinton to help with the national debt. That $1,000 means a lot to me but it will have an insignificant impact on our country's welfare and it will not be noticeable by anyone. So, the problem is not just that I am selfish, but that the individuals of the group get little from my contribution compared to what I would get giving it to myself.[2]

The act of voting that I have chosen to be representative of the social dilemmas, seems to be an irrational act for the individual. It has some cost and it would appear that one vote cannot impact the election results. Some say that there is a rational justification for voting and that is the possibility of breaking a tie. But the probability of breaking a tie in any election of any reasonable size is incredibly small. An excellent analysis of this probability is in the book, Democracy and decision listed in the references at the end of this essay. In any case, tie breaking is not the reason most people vote.

An Action can be both Good for the Individual but Bad for the Group

Specifically, the claim here is that a situation can exist such that: (1) while everyone would be better off if everyone contributes (cooperates), a particular individual is always better off not contributing (defecting) and (2) the individual's contribution will not affect the outcome anyway. That both of these conditions are satisfied for a voter in a national election is obvious on reflection. We are all better off if most people vote, but my vote will make no impact and it does cost me to vote. Hence the term, "Voter's Paradox" for this type of social dilemma.

The reader should not be too quick to cynically dismiss this assertion as some academic pathological construct. On the contrary, the situation described is extremely common -- as I will attempt to show in this essay by providing examples occurring in all walks of life.

Philosophers and social scientists claim that the VP is a special case of the well studied "Prisoner's Dilemma" phenomenon. "The Voter's Paradox", is similar to the "The Prisoner's Dilemma" in the payoff matrix (where the "other player" is everyone else) but is much more complex and much more common in the real world.

The VP phenomenon includes both contributions by an individual to a group shared benefit as well as the withdrawal of some portion of a group shared asset. The "contribution" example is best illustrated by the voting process itself. The "withdrawal" example is well illustrated by the so-call "Tragedy of the Commons" in which excessive withdrawals of a shared asset are done by certain individuals. This aspect is often called "freeloading" or "freeriding".

Some Examples to help Clarify the ConceptHere are a few examples of Social Dilemmas. More are listed here.

Water Shortage in Los Angeles

Let's say you live in Los Angeles and one day the city announces that, due to a water shortage, everyone should cut back on consumption. In particular, the city says that you should only shower once a week. Now you have been working in the garden and you really would like a shower! What are your options? If you don't take a shower, the water situation gets -- for all practical purposes -- no better but you are uncomfortable and stink like a clogged sewer. If you do take a shower there is great benefit to you but the small amount of water that you consume is insignificant compared to the total in the reservoir and, in fact, no one will notice. Put another way, your consumption when spread over the millions of residents in Los Angeles is of no consequence. (But "what if everyone did the same?". we are not talking about everyone, we are talking about one person -- namely you.)

Elections

There is some cost to you in voting.[3] While it may be small for some, it is significant for others. Some people go to a great deal of effort just to vote. What return do they get for this effort? Zilch! A single vote can only impact an election when there is a tie, which has essentially zero chance of happening in a state or national election. The typical response to this is "Well, what if everyone did that?" Of course, that would be a disaster. But we are not talking about everyone, we are talking about ONE individual.

Any activity, if "everyone does it", is likely to have a major impact on society. The next time you buy or sell a few shares of stock, consider "What if everyone does it?". What if everyone flushed the commode at the same time you do? Etc.

But like the Prisoner's Dilemma, if you do "cooperate" by voting and everyone else does, society as a whole is greatly benefited. On the other hand if everyone declines to vote -- which rationally they should -- we have a disaster. Yet each individual has a greater reward by not voting! That is the paradox.

The Voting Paradox has more sinister effects than just discouraging voting. Realizing that their vote will have essentially no effect on the election outcome, many people don't bother to get involved with politics at all! A quote from the book, Pathologies of Rational Choice Theory, says it well; "The hypothesis of 'rational ignorance' holds that the citizens know little beyond what they can learn costlessly, because they have no incentive to expend resources to become knowledgeable about political affairs.[3] In light of the small probability that any voter's ballot will prove decisive in an election, the rational citizen reasons that the benefits of casting a well-informed vote will not offset the expenditure of time and money spent gathering information." This view of the true cost of voting was expanded further in the November 4, 1996, issue of the newspaper, Investor's Business Daily, in an article called "Is Ignorance Rational?". The publication of this essay is very noteworthy as it represents one of the few times that the popular press has taken note of this phenomenon. It is particularly noteworthy that this is a conservative, no-nonsense, newspaper! A summary quote from this essay is: "Each person knows his vote won't decide the election, so he doesn't follow the issues".

Environmental Degradation

The environment is a "commons" shared by all of us. Obviously there is incentive to freeride and to destroy. The question is "how to minimize individual abuse of an environment shared by all". While most people think that the heavy hand of government must be brought in, some argue that that "ain't necessarily so". A good essay presenting this argument appeared in the September, 1993 issue of Atlantic Monthly , "Can Selfishness Save the Environment?" by Matt Ridley and Bobbi S. Low. It may be that the government solution is a solution that creates problems worse than the orginal.

Miscellaneous Examples

We are confronted with this paradox daily in our lives in many ways. To list a few: The disastrous national debt, the Balkins situation ("it was not in our personal interest to help them"), the rampant crime situation, the exploding welfare situation, the exploding medical costs, the insurance and legal mess, the deteriorating educational programs, the environmental crisis, etc., etc. All these -- and many other -- situations are characterized by the conflict between the "individual" interest and the "group" interest.

In some cases the "individual" may actually be a community, a state, an ethnic group or a nation. For example, my congressman, to help assure he will be elected again, continues to sponsor spending programs for our area of the country. Sure, the nation suffers (like Los Angeles, above) but we local folks are greatly benefited (like the individual taking a bath in Los Angeles). What if every congressman did that? They do. That's the problem!

Group Size and Anonymity

The VP results from the fact that for the individual there is greater reward for defecting than there is for cooperating. So why do many (most?) people cooperate? One reason is that cooperating can have many hidden rewards. No doubt, most people get a "feel good" reward when they help others or carry out their civic duties. Certainly, they are greatly rewarded if everyone knows about it. If these inner rewards are large enough, then it can become rational to cooperate.

But therein is a major problem. When mankind consisted of small family of hunter/gatherer groups every person's actions were known by everyone else. Even in modern times, people in small communities cooperate because their actions are displayed to everyone in the community.

On the other hand, most of us live in large cities in which no one knows or cares what we as individuals do, for the most part. If I send in an extra thousand bucks with my income tax because I really want to help the poor and the military, no one will know. My reward just doesn't come close to my cost, the thousand bucks. That is the situation most of us are in today and that is why defection continues to grow over cooperation.

The conclusion is obvious and many studies have shown (see the Hubermann reference) that people cooperate more if they are kept in small groups. Large organizations do better if they organize into many small components. People live fuller lives if they live in small towns. A political conclusion can be drawn here: have we done the right thing in centralizing our government in Washington?

Classifying Social DilemmasThe following is a short introduction on the various aspects of social dilemmas with brief indications of significance. [Note, this section is in its initial development!]

Continuous vs. Step Inputs

The PD is characterized by a "step" input: cooperate or defect. The VP, in elections where each person has only one vote, also has a step input: vote or not vote. Other social dilemmas may have a continuous input however. Consider voluntary contributions to a "Community Center" in which everyone can share as desired. Your contribution can be any amount. Most group efforts are such that a person can make variable contributions, including taxes.

(It is a bit peculiar that most of the literature on the social dilemmas tries to identify the phenomena with the PD when the PD is characterized by step input and social dilemmas are characterized typically with a continuous input. So, we see such terms as "Many-person Prisoner's Dilemmas" used to represent the general social dilemmas. If the "Tragedy of the Commons" is reduced to only two players (two farmers sharing a pasture) it still does not become a Prisoner's Dilemma game. The important conclusion here is that all the research and simulations of the various forms of the PD are not likely to be applicable to the general social dilemmas!)

Continuous vs. Step Outputs

An election is a step output. We don't get 45% Bush and 55% Clinton but we get either all Clinton or all Bush. But some social dilemmas have variable outputs. Consider the "Commons". If I add another cow to the pasture, all those who share the Commons will each get slightly less return.

Jointness of Supply

If an output from a group effort is in joint supply, one person's consumption of it does not reduce the amount available to anyone else. Public TV is a good example of a public good that -- once on the air -- can be consumed by a person without diminishing the service to anyone else. On the other hand, public highways, sewers, utilities, are not in joint supply. The more I use, the less is available to the rest of the group.

Impossibility of Exclusion

The environment, freedom, public television, public highways, etc. are generally impossible to exclude from a person who wants to use them whether that person contributed or not. That is, people can easily freeride if they want to.

Size of Group

When the group of players is small, the analysis of the game is fairly straight forward. If one person freerides, then the cost is divided over the other players. A good example is the example given by Glance and Huberman in the Scientific American, March, 1994 (See references) article in which a group of people are having dinner and intend to split the bill evenly. Some of the participants take advantage of this and load up with the most expensive dinners on the menu!

But what if the group is very large -- say all the citizens in your state or country -- is it still useful to consider the group as being individuals? I think not. It seems to make more sense in this situation to regard the individual as interacting with the group. For example, in the Voter's Paradox, if I decline to vote, I am not defecting against any individuals but society as a whole. If I were to represent the situation with a matrix, it would only show the payoffs for me and "the rest of the group". A further assumption would be that I am anonymous. This fact creates additional problems above and beyond the small group freeriding situation. And emphasizes the inappropriate use of the PD as a model!

A Basis for Morality?

Like the players of the Prisoner's Dilemma, we are confronted with a situation in which, rationally, an individual should defect (freeride) but we will all suffer if both players (the individual and the "rest of society") take that action. While there are other actions that will help to alleviate the problem, the most promising and most general solution is well known and has a long history: morality.

If somehow we can establish that cooperating is the moral thing to do and we can convince everyone (or, at least, most everyone) to be moral, then we have solved the problem. People will vote, politicians will not steal, teenagers will avoid irresponsible sex, people will conserve resources or not pollute the environment, and so on.

Could it be that human society is so constructed that to survive, morality is necessary? An intriguing thought -- a nonreligious basis for morality! And a powerful one: either we cooperate or we face a total destruction of civilization as we know it.

For more on this issue, see my essay, "A RATIONAL JUSTIFICATION FOR ETHICAL BEHAVIOR".

Solutions: Some Successes, Many Failures

Metering or Directly tying the return to the cost

The paradox goes away when a person is directly rewarded or punished by her actions. The strategy would be to delete or minimize the "group" component in the cost/benefit equation. That this is not always possible is recognized.

Many "Public Goods" could really be converted to "Personal Goods". For example, in the water usage problem or the garbage removal problem, a simple solution would be to monitor each person's usage and charge them accordingly. Toll roads are another example.

Small Groups

As discussed above, we have few problems with the freerider aspect of the VP when everyone in the group is personally acquainted with each other.

Coercion and other Outside Inducements

Garrett Hardin stated in his 1968 paper that the solution to the class of problems discussed here -- those having "no technical solution" -- is "mutual coercion, mutually agreed to". Practically, this means government control, a democratic government, most would say. But that has its downside too -- a big downside!

Using the Government to do your dirty work

Most activist groups use the government to enforce cooperation when it is obvious that voluntary cooperation will not do the job. The Environmental movement would be dead if left up to the voluntary cooperation of the citizens. In fact, it is difficult to find a purely voluntary program that is successful -- even if the citizens agree to its necessity!

Another example is "culture". Those that would provide "culture" to the masses know that the masses would not support this by any voluntary sacrifice. So they use the force of law to give the masses what they "need".

There is a dear price to pay in using the government to solve the Social Dilemmas. The government primarily controls by means of laws. The laws passed to force personal "cooperation" of the freeriders, hurt us all. For example, the criminal justice system is a failure due to the lack of "cooperation" of the various responsible individuals; the judges, the police, the prison administrators, etc. As discussed elsewhere in this series of essays, each of these people find that looking after their own interests[4] is at odds with solving the crime problem. Guess which wins! To combat this "defection" the government (from citizen pressure, by the way) has passed Mandatory Sentencing laws and other such disastrous laws. This not only results in cruel and excessive punishment for some who have done little or no harm to society but also has generally complicated the Criminal Justice system even more!

Jonathan Baron's essay entitled "Political action vs. voluntarism in social dilemmas and aid for the needy", published in Rationality and Society, 9, 307-326, provides an analysis of the comparative benefits of doing nothing, voluntary contribution, and attempting to induce the government to force people to do what is "good for them".

Using Religion to induce cooperation

Religions have been quite effective in inducing people into cooperating and acting in the group's best interests. However, religion's technique of increasing the reward and/or punishment by promising an afterlife is not easy for many to accept. The force of religion as a means of invoking cooperation seems to be declining as the population has become more educated and "world-wise".

Using propaganda to encourage cooperation

The news media and the educational establishment have been quite effective in seducing members of society into "doing the right thing". The enormous guilt that many people feel if they don't throw their aluminum can in the recyclable bin is a testimony of the power of propaganda.

The disadvantage is that propaganda can be misdirected. Examples are too numerous to mention in this limited space!

Where to get More Information?

The study of social dilemmas is scattered over several disciplines: Game Theory, Social Science, Philosophy, Economics, Politics, Public Choice Theory, Social Choice Theory, and Computers (Artificial Intelligence). It is not an easy subject to cover. The references I have provided below would provide a good start. I was particularly impressed by the works of the Hardins, Gauthier, Olson, Brennan, Lomasky and Buchanan. There is some stuff on the internet but finding it is not easy due to the subject being spread over so many fields. Much of the stuff on Prisoner's Dilemma, which is readily accessaboe, I feel is not very pertinent to the real world social dilemmas. It seems that the PD is a fun game for academics to play while the social dilemmas are just too messy. However, the PD model is important as a simple representation of the "non-zero-sum" nature of society's many "games".

By: Leon Felkins Date: 10/14/95 Email: leonf@perspicuity.net

Notes:

1. The term "Voters Paradox" has already been assigned to another phenomenon involved with preference ordering. Nevertheless, the example of voting is just too good of a representation of the Social Dilemmas to be ignored. Sorry.

2. Parfit (see References) proposes an interesting situation in which a thousand wounded soldiers are dying of thirst in the desert. A thousand altruists each have a pint of water that if each gives to a dying man can save his life. An alternative way of delivering the water would be for each altruist to pour her pint into a water cart and then each man be given his pint from the common water cart. Now the altruist has to realize that by not donating her pint of water, the impact on the men would be imperceptable for each man would now receive one one thousandth less water. This insignificant contribution may make the altruist decide that it is not worth it whereas before her contribution would have saved a life. What changed?

3. For a responsible voter, the major cost of voting is acquiring knowledge of the issues. See Patrick Gunnings on-line book on Public Choice for more info on this important fact.

4. Self interest of public officials is covered under the theory of Public Choice. See the online book by Pat Gunning, identified in the Reference section, below.

References:

Aristotle's "Politics", Written c.a. 350 BC

Axelrod, Robert; The Evolution of Cooperation. Basic Books, New York, 1984.

Brennan, Geoffrey and Lomasky, Loren; Democracy and decision. CAMBRIDGE UNIVERSITY PRESS, New York, 1993

Buchanan, James and Tullock, G.; The Calculus of Concent. University of Michigan press, Ann Arbor, 1962.

Dawkins, Richard; The Selfish Gene. New York: Oxford University Press, 1976.

Gauthier, David. Morals by Agreement. Clarendon Press, Oxford. 1986

Glance, Natalie and Huberman, Bernardo; "Dynamics of social dilemmas". Scientific American. March, 1994 (See their page on Dynamics for some of their simulation results)

Green, Donald P. and Shapiro, Ian. Pathologies of Rational Choice Theory. Yale University Press, New Haven, 1994

Hardin, Garrett, "The Tragedy of the Commons", Science, 162:1243-1248, 1968. (Now online at http://www.aloha.net/~jhanson/page95.htm)

Hardin, Russell, Collective Action, Johns Hopkins University Press, Baltimore, 1982.

Lichbach, Mark Irving. The Cooperator's Dilemma. University of Michigan Press, Ann Arbor, 1996.

Lomasky, Loren; "The Booth and Consequences". Reason. November, 1992. A copy is here.

Olson, Mancur. The Logic of Collective Action. Harvard University Press. 1971

Ostrom, Elinor. Governing the Commons. Cambridge University Press, New York, 1990

Parfit, Derek: Reasons and Persons. Clarendon Press. Oxford. 1984.

Ridley, Matt: The Origins of Virtue, Viking. 1997

On the Internet:My essay, "Voter's Paradox" at this and other sites. Social Dilemmas (in Postscript format). -->

Peter Carter's Essay on "The Student's Dilemma" -- containing experimental results obtained with high school students.

Patrick Gunning's book, UNDERSTANDING DEMOCRACY: An Introduction to Public Choice

Ashlock's and Smucker's paper, The Iterated Prisoner's Dilemma with Choice and Refusal

John O. Ledyard's Public Goods: A Survey of Experimental Research, 1994

多谢闲人。

"Everybody's business is nobody's business." ——有意思！

The Social DilemmasBy Leon FelkinsWritten 10 Dec. 1995Last Revision on 15 Feb. 2004 This area is in work. Best I can tell, it will always be that way

"For that which is common to the greatest number has the least care bestowed upon it. Every one thinks chiefly of his own, hardly at all of the common interest; and only when he is himself concerned as an individual. For besides other considerations, everybody is more inclined to neglect the duty which he expects another to fulfill; as in families many attendants are often less useful than a few. Each citizen will have a thousand sons who will not be his sons individually but anybody will be equally the son of anybody, and will therefore be neglected by all alike." -- From Aristotle's "Politics", Written c.a. 350 BC

Unless you are in certain specialties of Liberal Arts in the academic world, you probably have never heard the term, Social Dilemma, a dilemma or paradox that commonly results from Collective Action. Like me, you may have read a little bit about the Prisoner's Dilemma a few years ago when it received some publicity in well known publications such as Scientific American. Most of you probably dismissed the Prisoner's Dilemma story as just another academic construction with little real significance. But I found the "collective action problem" -- the "social dilemmas" -- that is the fundamental characteristic of the Prisoner's Dilemmas, very intriguing. Since I like puzzles, paradoxes, and examples of the apparent diabolical nature of the universe, I became very interested in the subject and continued to give it much thought.

From the Prisoner's Dilemma "game" I drifted into the more general and much more significant study of the Social Dilemmas. What I have found is that this little field of study, tucked away in several obscure corners of academia and little known by the general public, is concerned with one of most serious and baffling problems in the civilized world today! Uncontrolled government spending, the deterioration of the public schools, the near collapse of law and order, the loss of individual freedom, out of control welfare programs, teenage sexual promiscuity, are just a few examples that result from the Social Dilemmas.

So, I hope you will check out what I have to say here and whether you agree or disagree, let me know.

Let us first review the simpler, but far more well known, example -- the Prisoner's Dilemma.

IntroductionThe Prisoner's Dilemma (PD)The Prisoner's Dilemma is a short parable about two prisoners who are individually offered a chance to rat on each other for which the "ratter" would receive a lighter sentence and the "rattee" would receive a harsher sentence. The problem results from the fact that both can play this game and if both do, then both do worse than they would had they kept silent. This peculiar parable serves as a model of cooperation between two or more individual in ordinary life in that in many cases each individual would be personally better off not cooperating (defecting) on the other.

The Prisoner's Dilemma model's real importance is that it is simple yet fully displays the problem of a "Social Dilemma" typically arising in a "Collective Action" -- which can be defined thusly: "The problem of collective action can then be taken in a preliminary way to be a dilemma or conflict between collectively and individually best action, where the action required for achieving the collectively best outcome or goal is different from (and in conflict with) the action required for achieving the individually best outcome. . ." (Quoted from "On the Structural Aspect of Collective Action and Free-Riding" by Raimo Tuomela, published in Theory and Decision 32: 165-202, 1992)Understanding the PD, then, is the first step in understanding the Social Dilemmas in general.

As many of you are familiar with the so-called "Prisoner's Dilemma Game", I will not repeat the details here. However, if you do not fully comprehend the details of the model, then you should take a moment and review it because it is important to the understanding of the rest of this essay. For a good introduction to the Prisoner's Dilemma , see Special Issue of The Ethical Spectacle. For your convenience, a brief write-up on the Prisoner's Dilemma, including references, is included in this series of essays. Another good essay on the PD with much supporting material is available at Principia Cybernetica (For more good stuff there, go to the Table of Contents. The Principia Cybernetica is a massive and ambitious site that covers such things as the Social Dilemmas, Memes, Cognitive Science, Philosophy, Psychology, Communications, Computers, etc., etc. The table of contents is overwhelming, although probably most items are empty at this time. It appears that it will take years to finish this project!) For an even more scholarly discussion of the PD, go to the Stanford Encyclopedia of Philosophy. There you will find a discussion on related forms of this non-zero-sum game, such as "Chicken" and the "Assurance Game". Newsgroups and Interest Groups on the Internet. I'm still looking. I have checked out a couple of the Interest Groups with little success. Not much activity. As those who study music may actually play music at times, those who study defection seem to have a strong propensity to defect. That makes communication with such groups somewhat difficult. If anyone finds an interesting and/or useful group, please send me email on it. Other References are here. Social Dilemmas (SD) or 'The Problem of Collective Action'While the Prisoner's Dilemma illustrates the basic paradox of cooperation -- "the individual gains more by not cooperating, but if both defect, they both lose more than they would if both cooperated" -- it is not as general and as common as the Social Dilemmas. The Social Dilemmas result from the situation in which a group shares a common output and in which each individual must decide to contribute or not. An example would be a community picnic with voluntary contributions. It turns out that the "rationally" best choice of the individual is to "free-ride" if she can share in the group rewards regardless of her contribution.

At this point in the explanation, most people get their hackles up and say such things as "Only a real jerk would intentionally freeload on a picnic, or such, without at least trying to contribute their share". True, but don't be too quick to dismiss the possibility that even you might free-ride! It depends on the circumstances, especially the cost. For example, most people routinely try to avoid paying any more taxes than they have to. I would say you're free-riding, particularly if you are getting more in services from the government than you are paying. Go to "examples" for more.

In this essay, I will only be able to touch the high spots of what this problem is all about but I will provide extensive references for those of you that would like to know more. Basically the issue is about the problem of group shared property where individuals that do not contribute cannot be excluded. Such individuals are often called "free-riders" and such shared goods are referred to as "public goods". "Public Goods" was precisely defined by Russell Hardin in his book, Collective Action (see references), as goods having these two characteristics: Non-excludability - If the good is available to anyone, it is available to all. It is impossible to exclude anyone. A good example is Public Television. It is in the airwaves. Anyone can make use of it. Another example is the Mississippi River levee. If I live next to the river, I get its benefits the same as anyone else. Clean air is another one. Jointness of Supply - The supply of the good is inexhaustible. If I use some of it, it is still fully available to everyone. The Public Television is a good example again. If I chose to watch Public TV, it in no way reduces the amount of Public TV available to everyone else.

From this we would conclude that Public TV is a "Public Good". Note that this definition of "Public Good" is overly stringent and many shared objects do not completely comply with the definition. Nevertheless, the social dilemma problem arises whether the good is a strict "public good", as defined above, or not.

Some Examples of Social DilemmasIf this is more than an academic exercise, then there must be real world examples. I have started a collection of examples in a separate essay that can be accessed through this link. Also, you may want to look at some experimental results in Peter Carter's paper, "The Student's Dilemma".

The Tragedy of the Commons The scenario, "The Tragedy of the Commons" (TOC), is also a Social Dilemma but is a little different in structure than the PD scenario. It represents a very serious problem of society, one that is even more common than the PD representation. It is basically characterized by "public goods" and "free-riders" and the fact that it is in the, rational, best interest for an individual sharing a public good (i.e., common good) to free-ride. I call this problem "The Voter's Paradox" and discuss it in detail in that essay.

The defining characteristic of the TOC, is the concept of the "common good". First off, common good is difficult to define -- see the book review of Michael Novak's Free Persons and the Common Good at FFF.There seems to be a difference in meaning between "the common good" and "a common good". "The common good" seems to be based upon the differentiation between the things that are good for individuals and the things that are good for everyone, the public welfare. For example "equality before law" might be considered a component of "the common good" and "winning your speeding ticket case" would be an individual or private good.

When we talk about "a common good", we are referring to specific things that as discussed above and elsewhere where I refer to "a public good" and has the same meaning.

Note that some distinction still needs to be made in what we mean by common. Are we talking about our community, our nation, or the world? All are allowed -- we just need to make sure we specify the scope, for a common good in India could likely not be appropriate in the U.S., for example.

A comprehensive paper that discusses the concept of "common good" and the various definitions is available on the internet as "THE COMMON GOOD IN PHILOSOPHICAL LITERATURE AND EGO TRANSCENDENCE FOR THE COMMON GOOD IN PSYCHOLOGICAL LITERATURE" by Jacqueline B. Magness, which is a chapter in her dissertation, "The Genesis and Gestation of a Justice Journey: Catherine Pinkerton, CSJ, Champion of and Educator for the Common Good".

More on The Tragedy of the Commons: Original article with this title by Garrett Hardin appeared in Science, 162:1243-1248, 1968. A copy of the original essay is now online. An essay providing some background on The Tragedy of the Commons is here. Note, I found this essay a bit preachy, but it reads easier if you substitute "selfishness" wherever you see "greed". A related phenomenom, "The Matthew effect", is discussed in the online essay, Growing the Global Good in the Information Age, by Philippe Qu閍u. The effect is named after the quotations from the Bible, Matthew 13:12 and 25:29, which basically says that "them that has gets, and them that don't lose". More here.

The Volunteer's Dilemma"Facing Major Major Major Major's rebuke for not wishing to fly any more bombing missions over Italy, Yossarian contends that the bombs he could drop would make little or no difference to his eventual well-being, while the risks involved in dropping them might make an enormous difference to him." - Russell Hardin commenting on Heller's Catch-22 in his book, Collective Action

A few years ago, the newspapers reported a tragic story about the murder of Kitty Genovese. Thirty-eight people watched and listened as the Queens, New York, resident was raped and stabbed to death in the courtyard of her apartment complex. Though she screamed for help for an hour and a half, no one called the police until the attack was over. This gruesome episode well illustrates the problem of the Volunteer's Dilemma. In his book, Prisoner's Dilemma, William Poundstone tells of several forms of this dilemma but the classic example is given by the story about what soldiers in a trench are suppose to do if a live grenade falls into it. If one soldier will fall on the grenade, he will die and the rest will survive. If no one falls on the grenade, they all die. What should the individual soldier do in the few seconds he has to make a decision? The choices are "die" or "maybe survive". "Maybe survive" would get most people's vote but to do that you must not volunteer (that is, wrap yourself around the grenade)! An essay by J.O. Urmson, "Saints and Heroes", is considered to be the best treatment of this subject. The essay is included in the books, Moral Concepts, ed. Joel Feinberg (London: Oxford University Press, 1969) and A. I. Melden's Essays in Moral Philosophy (Seattle: University of Washington Press, 1958). An online reference is the article by Gregory Mellema, "Beyond the Call of Duty".

It appears that when there is some kind of undesirable activity going on in which the intervention of others could stop it, people are reluctant to act if there is more than one observer present. Each waits for the other to do something. Experiments have shown that the more people there are present, the less likely any individual will take action!

This problem, which is very representative of Social Dilemmas which generally do not have a technical solution, is related to the game of "Chicken" and the game of "Take it or Leave it".

To learn more about Social Dilemmas, check out these links:

My essay on the fundamentals of Social Dilemmas is available at various sites on the Web including The Ethical Spectacle special issue mentioned above. For your convenience, I have provided a brief introduction to the Social Dilemmas at this site. My, overly ambitious, comprehensive essay on Social Dilemmas in its current state of incompleteness is provided at this site. A good start for the serious student is Hobbes Leviathan, which is on the net in several places. I got my copy at the Alex 'etext' site, which has many other classic texts in electronic form. Some papers on modeling of the Social Dilemmas originally developed at the PARC site. My essay on the ramifications of the Social Dilemmas, titled "A Cooperative Society Composed of Selfish Individuals", was published in the UXU ezine and is available here. My argument that the individual is totally helpless in modern societies is presented here. The essay, The Common Good and the Voter's Paradox co-authored by myself and Mack Tanner that appeared in the magazine, IDEAS, August 1992. References that Discuss the Concept of Public Goods An excellent introduction to the concept of Public Goods, Cliff Landesman's dissertation, "The Voluntary Provision of Public Goods". An extensive discussion on the experimental issues regarding Public Goods is provided by John O. Ledyard in the report, Public Goods: A Survey of Experimental Research. Newsgroups and Interest Groups on the Internet. I'm still looking. The above comments under Prisoner's Dilemma apply as well to Social Dilemma interest groups. Other References are below.

Theory and Analytical MethodsGame TheoryA reasonable definition of Game Theory, as provided by the Columbia Encyclopedia, is:

Game Theory "Group of mathematical theories, applying statistical logic to the choice of strategies in a game. A game consists of a set of rules governing a competitive situation in which two or more individuals or groups attempt to maximize their own winnings or minimize their opponents. Game Theory, first developed by John Von Neumann, is applied to many fields, e.g., military problems and economics."

Game Theory provides a methodology for analyzing interactions between players more than it provides solutions. While it has had some success in analyzing the Prisoner's Dilemma, it hasn't provided much insight into the general Social Dilemma problem.

A good introduction to Game Theory is available from Roger A. McCain's course notes. Click here for an introduction and a table of contents for the complete set.

Non-Zero-Sum Games

Zero-sum games are models of situations in this world in which the total rewards of a transaction is zero. That is, whatever you gain, I lose and vice versa. For example, let us say you give me $5. You are now down minus $5 and I am now up $5; the sum for the two of us did not change. Such transactions are relatively simple.

Unfortunately in the real world, the sum of the transaction rewards is rarely zero -- which results in a much more complicated scenario. Let us say I would value a certain old Hank Williams phonograph record at $50 and you wouldn't give two cents for it. But you find one in the attic of the old house your old house. You offer it to me for $20 and we make the trade. After the trade, my situation is I have give up $20 and gained $50 (in value) for a net result of plus $30. You, on the other hand have increase the value of your holdings by $20 (the 20 dollar bill that I gave you). So the net result of this "game" transaction is plus $50 -- definitely a non-zero-sum game.

The Prisoner's Dilemma and the other Social Dilemma games studied in these essays are all non-zero-sum. To learn more about these games just search the web as there is thousands of articles on the subject! A good place to start would be "Non-Zero-Sum Games", by Janet Chen, Su-I Lu, and Dan Vekhter.

Nash Equilibrium

The movie and book, A Beautiful Mind, by Sylvia Nasar, about the mathematical genius John Nash has given the public an awareness of "Game Theory" and probably a new incentive for students to want to go into that field. John Nash made a major contribution to the analysis of games when he developed what is now called the "Nash Equilibrium", in which he defined ". . . an equilibrium of a noncooperative game to be a profile of strategies, one for each player in the game, such that each player's strategy maximizes his expected utility payoff against the given strategies of the other players.", quoted from "NASH EQUILIBRIUM AND THE HISTORY OF ECONOMIC THEORY", by Roger B. Myerson.

Unfortunately, the Nash Equilibrium, does not necessarily yield the "best" result (in the sense that we would all be better off if we cooperated with each other). In particular, the Nash Equilibrium for the Social Dilemma prototype, the "Prisoner's Dilemma", is for both parties to defect. So, it appears that the Nash Equilibrium may be a useful tool in analysis of games but is not necessarily a good indicator of what ought to be done in real life. It appears that the Nash Equilibrium can be equated with what we call "rational" and we have seen in these pages that "rational" actions do not always result in the best interests for the group.

A more complicated game that also illustrates the problem of an undesirable Nash Equilibrium is the game, "The Traveler's Dilemma", as described in a classic paper by C. Monica Capra, Jacob K. Goeree, Rosario Gomez, and Charles A. Holt.

A short description of this game is given at the "veconlab.econ.virginia.edu" site: The discussion can be motivated by a story of two travelers who lose their luggage with identical contents, and the airline official tells them to fill out claim sheets independently. The representative promises to reimburse claims fully if they are equal, but to assume that higher claims are falsely inflated and in this case to only give each person the minimum of the claims. In addition, a reward of $R is given to the low claimant, and an equal penalty is deducted from the compensation for each of the others. Discussion can lead to the discovery that only the lowest feasible claim is a Nash equilibrium. Deviations from this equilibrium are not surprising if R is relatively low. See Capra et al. "Anomolous Behavior in a Traveler's Dilemma," American Economic Review, June 1999.

Let me elaborate a bit. Let me first add that the travel agent sets upper and lower limits on the claims, e.g., "anything from $50 to $300". The situation is that the low claimant will get the minimum claim plus R dollars and the high claimant will get the minimum claim minus R dollars. Let us say the two claims are $210 and $250 (after the discussion of this game in "Ten Little Treasures of Game Theory and Ten Intuitive Contradictions" by Jacob K. Goeree and Charles A. Holt). Then the low claimer gets $210 +R dollars and the high bidder gets $210 -R.

We can do a Nash analysis of this game without specifying the value of R. Mathematically it doesn't matter. Let us consider that R is $20 and we take a look at the maximum, $300. Well that is not a good bid, for the other guy can bid $299 and he will get $319 and I will get $279. Not good. So $300 is out. But so is all the rest of the possibilities down to the minimum, $50, for the same reason. So we both bid $50 -- and that is the Nash Equilibrium for this game. Again, I want to point out that this is true regardless of what the value of R is.

But in real life, people bid differently depending on the value of R. For low values of R, the bids tend to be high, as you would expect. See the references for details of actual tests with students playing the travelers' roles.

Rational Choice Theory (Social Choice, Public Choice, Collective Choice)Rational Choice Theory is concerned with the decisions a rational individual should make in an individual or collective environment and is the basis for Social and Public choice theories. Social (or Collective) Choice is dedicated to the particular problem of choice in a collective environment. Public Choice is directed toward public goods including governmental administration. The major question is: in a social, public, or collective situation, and a choice concerning the individual's contribution must be made, how is that choice to be rationally decided? It turns out that the answer to this question is very difficult and fraught with paradoxes and dilemmas. Social scientists have made great progress in understanding the problem, but little progress in identifying solutions.

An extensive critique of the rational choice view is given by Michael Byron, Jr.'s dissertation, Rationality and the Paradoxes of Decision Theory: A Critique of Rational Choice Views and is recommended reading (unfortunately, the essay is no longer online and I have not found a published source for it).

An excellent book on the subject that provides both a critique of the failures of Rational Choice Theory as well as an introduction to the concepts involved is the book, Pathologies of Rational Choice Theory by Donald P. Green and Ian Shapiro, (Copyright 1994, Yale University Press).

Some links on the net: Hans O. Melberg's essay on "Three arguments about rational choice theory in sociology", an introduction to Public Choice Theory by Allan Barton, and a list of Jon Elster's many papers, books, etc., on the subject.

Politics, Elections and Social ChoiceWhile the media and the politicians rant on about why don't more people vote, the philosophers know that the real question is why does anyone vote!

For now the best reference on this subject that I can suggest is a book by Geoffrey Brennan and Loren Lomasky called Democracy and decision, 1993, published by Cambridge University Press. Dr. Lomasky also has an article titled "The Booth and Consequences", subtitled "Why Vote?", in the November 1992 issue of Reason magazine where he is a contributing editor. Both the article and the book present a very even handed, factual account of this field and -- most refreshingly -- they are not your usual liberal pap or conservative hysteria.

An interesting article from the Journal of Mathematical Sociology, 1985, "The Human Brain, Social Conformity, and Presidential Elections", by Stephen Coleman, suggests -- with supporting evidence -- that people who vote and their selection of a candidate are mainly conforming to social norms. He further says, "If a society is conformist to a certain degree in getting people to vote, it will be conformist to the same degree in how the vote divides among the political parties." So much for critical and objective analysis by the electorate!

For my view on the sloppy thinking involved with "wasting your vote" (when you vote for candidate that is not a Republican or a Democrat), see the essay, "How to Avoid Wasting Your Vote" (A slightly shorter version is at The Vagabond).

Economics and Public Choice TheoryPublic Choice Theory has resulted from an application of Economics and Rational Choice Theory to the political environment. Credit for establishing the theory usually goes to James Buchanan and Gordon Tullock primarily from their book, The Calculus of Consent which they published in 1962. Their work is particular appealing in that it is, according to Buchanan, based on common sense instead of romance. I quote from an interview of Buchanan: "[Public Choice] is nothing more than common sense, as opposed to romance. To some extent, people then and now think about politics romantically. Our systematic way of looking at politics is nothing more than common sense."

My essay, "An Introduction to Public Choice Theory" is now available for your perusal.

A complete text on the Theory of Public Choice is now available on the internet. This outstanding and comprehensive essay is provided by J. Patrick Gunning at his site, UNDERSTANDING DEMOCRACY. While you are at that site, you might want to click on the "Go back to Home" link at the bottom of the page to see other relevant material.

I have made an effort to look at politics with common sense in my essay on Political Realities. To learn more consult the references, particularly books by Buchanan, Olson, Hardin, and Taylor.

When I find more good links to material on the net covering this subject, I will add them.

Computer ModelingThe most extensive computer modeling of Social Dilemmas that I am aware of is the work done by Bernardo A. Huberman and his cohorts at the Xerox Palo Alto Research Center. Fortunately, much of his work is available on the internet. You can access the list by following this link to their Dynamics site. Most of the papers are in postscript but if you have trouble displaying them, you might be able to get a paper copy by writing to Dr. Huberman and requesting same. A summary article on this issue, "The Dynamics of Social Dilemmas", by Bernardo Huberman and Natalie Glance also appeared in the March, 1994 issue of Scientific American. Solutions to the Social DilemmasMoralityThere are some who believe that morality may be a solution to the Social Dilemmas. I have an essay, entitled "A Rational Justification For Ethical Behavior" , that discusses this possibility and suggests that the Social Dilemmas may be a rational basis for an essential set of morals.

MemesThe human mind seems to be highly susceptible to accepting a large passel of unexamined beliefs ("memes") -- from which the human then blindly follows. That being the case, the meme would seem to be a powerful tool for eliciting cooperations from the masses. Like all powerful tools, unfortunately, it can and is much misused.

Some of my thoughts on "memes" are contained in the article, "Common Sense".

GovernmentMany believe that government is the only practical solution to the Social Dilemmas. The philosopher Hobbes emphasized the idea that all people would be at war with each other without the force of government to control them. The justification for government is often based on the Social Dilemmas. The "Catch 22" is that government itself brings along a passel of Social Dilemmas as bad or worse as the one it is supposed to solve. Elinor Ostrom, in her book Governing the Commons, discusses this problem of "Dilemmas nested inside dilemmas" stating, "Because supplying a new set of rules is the equivalent of providing another public good, the problem faced by a set of principals is that obtaining these new rules is a second-order collective dilemma." (Emphasis added). Specifically, if government is invoked to solve the social dilemma, then government, being a public good itself, provides a new social dilemma possibly much worse than the original! More on the ramifications of the government solution in my essay on "Simple Theory of Politics (STOP)".

Many people make a logical error -- the so-called "False Dilemma" argument -- in assuming that government is the solution to the Social Dilemmas. The argument is based on the idea that "given the claims A and B, if A is false, B must be true". That is, we know that free enterprise fails when it comes to the problem of public goods so government must be the answer! Wrong. Government could be worse. See the article by Adam Przeworski, "A Better Democracy, A Better Economy" that discusses the problem in a somewhat even-handed way.

ReligionAssuming that cooperation results in a greater good for everyone, religion has some merit for it can elicit that cooperation. Unfortunately, to do so, it often resorts to deceit, fear, and manipulation. The question then becomes, does the end justify the means?

Privatization and MeteringIf a public good can be privatized -- and many can not be -- then by privatizing, the forces of the free market can be brought to bear which can sometimes solve the problem. Examples would be toll roads instead of public roads and dividing up the commons into individually owned (or rented) plots. Metering[1] of usage could also solve many problems. For example, to keep people from wasting scarce water, each user's consumption could be metered and they could be charged accordingly. More on this solution in my essay on "Solutions to the Voter's Paradox".

More on Solutions

Mark Irving Lichbach provides the most comprehensive discussion of potential solutions to the Social Dilemmas in his book, The Cooperator's Dilemma (University of Michigan Press, 1996). I say potential solutions since all the solutions he proposes have serious defects. Here is a list of solutions he proposes:

Market

The Market solution is based on modifying the "cost/benefit" equation so that the benefit to the individual exceeds the cost. The main problem with this approach is that is simply not possible for many public goods.

Community

Community solutions are based on the idea that members of the community can develop common understandings that they will act together. Of course, this relies on trust which is not practical in many communities. The main problem, however, is that this solution requires that people be altruistic rather than egoistic, which is, practically, not very realistic.

Contract

Contract solutions are based on the concept that individuals can recognize that human weaknesses include the problem of free-riding and defection and therefore may make contracts between themselves to severely punish such actions. The problem is that someone must enforce these contracts and therefore a police agency must be established. This, of course, is the beginnings of government and we know where that will lead us!

Hierarchy

This concept requires that an hierarchical organization exist with enough power at the top to enforce the needed cooperation. Of course, we are talking about government here as Hobbes described it in his works. The problems resulting from this solution are major, as is discussed extensively in these essays.

For further discussion of solutions, refer to my own essay on Solutions to the Voter's Paradox.

Games and PuzzlesNo, not Game Theory, but games that you can play. There are a few games and puzzles based on the Social Dilemma idea that are somewhat amusing. Much more effort is really needed here.

Notes:

1. By metering, I mean the charging for the use of a good based on its economic value or cost.

References:

Aristotle's "Politics", Written c.a. 350 BC

Ashlock's and Smucker's paper, The Iterated Prisoner's Dilemma with Choice and Refusal

Axelrod, Robert; The Evolution of Cooperation. Basic Books, New York, 1984.

Peter Carter's Essay on "The Student's Dilemma" -- containing experimental results obtained with high school students.

Dawkins, Richard; The Selfish Gene. New York: Oxford University Press, 1976.

Dixit, Avinish and Susan Skeath; Games of Strategy. New York: W. W. Norton & Company, 1999.

Leon Felkins, "The Voter's Paradox" online at this and other sites.

Patrick Gunning's book, UNDERSTANDING DEMOCRACY: An Introduction to Public Choice

Gauthier, David. Morals by Agreement. Clarendon Press, Oxford. 1986

Glance, Natalie and Huberman, Bernardo; "Dynamics of social dilemmas". Scientific American. March, 1994 (See their page on Dynamics for some of their computer simulation results)

Green, Donald P. and Shapiro, Ian. Pathologies of Rational Choice Theory. Yale University Press, New Haven, 1994

Hardin, Garrett, "The Tragedy of the Commons", Science, 162:1243-1248, 1968.

Hardin, Russell, Collective Action, Johns Hopkins University Press, Baltimore, 1982.

Heller, Joseph. Catch-22. Simon & Schuster, New York, 1961

Hinich, Melvin J. and Munger, Michael C., Ideology and the Theory of Political Choice, University of Michigan Press, Ann Arbor, 1994

John O. Ledyard's Public Goods: A Survey of Experimental Research, 1994

Lichbach, Mark Irving. The Cooperator's Dilemma. University of Michigan Press, Ann Arbor, 1996.

Lomasky, Loren; "The Booth and Consequences". Reason. November, 1992. A copy is online here.

Monroe, Kristen Renwick (Editor). The Economic Approach to Politics. Harper Collins, New York, 1991.

Myerson, Roger B.: "NASH EQUILIBRIUM AND THE HISTORY OF ECONOMIC THEORY", March 1999, on the web at http://home.uchicago.edu/~rmyerson/research/jelnash.pdf

Nasar, Sylvia. 1998. A Beautiful Mind. New York: Simon & Schuster.

Olson, Mancur. The Logic of Collective Action. Harvard University Press. 1971

Ostrom, Elinor. Governing the Commons. Cambridge University Press, New York, 1990

Parfit, Derek: Reasons and Persons. Clarendon Press. Oxford. 1984.

Ridley, Matt: The Origins of Virtue: Human Instincts and the Evolution of Cooperation. Viking Penguin, New York. 1997

Sandler, Todd: Collective Action. University of Michigan Press. 1992

Saari, Donald G.: Web page at http://www.math.nwu.edu/~d_saari/ has some interesting papers on the problems and paradoxes of voting. [Oh, well, it used to. You might try Google search for 'voting' and 'Saari'.]

Eivind T鴖tesen's Masters Thesis on the Dynamics of Hierarchically Clustered Cooperating Agents.

Tuomela, Raim "On the structural aspects of collective action and free-riding", Theory and Decision 32 (1992) , 165-202.

Tuomela, Raim Cooperation, Kluwer. 2000 (The first chapter and the Table of Contents plus other related essays are online at Dr. Tuomela's home page.)

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