ECS1050.05.post

# ECS1050.05.post - Unit III The Evolution of Cooperation 7/7...

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Unit III: The Evolution of Cooperation Can Selfishness Save the Environment? Repeated Games: the Folk Theorem Evolutionary Games A Tournament How to Promote Cooperation 7/7

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Can Selfishness Save the Environment? The Problem of Cooperation The Tragedy of the Global Commons? Common Resource Game We Play a Game Repeated Games Discounting The Folk Theorem
How can a number of individuals, each behaving as a utility maximizer, come to behave as a group and maximize joint utility? The Problem of Cooperation

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C 6 ,6 0,5 D 5,0 1 ,1 The Problem of Cooperation C D Players may fail to cooperate (i.e., fail to maximize joint payoffs), because they lack information. If each has reason to believe the other will cooperate, the problem is solved! Assurance Game Prisoner’s Dilemma
C 6 ,6 0,5 D 5,0 1 ,1 The Problem of Cooperation C D C 3,3 0,5 D 5,0 1 ,1 C D Assurance Game Prisoner’s Dilemma

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C 6 ,6 0,5 D 5,0 1 ,1 The Problem of Cooperation C D C 3,3 0,5 D 5,0 1 ,1 C D Easy In the Prisoner’s Dilemma, there is no belief that will lead the players to cooperate. Rather than a problem of information, this is a problem of incentives. Cooperation is both inaccessible and unstable. Prisoner’s Dilemma
The problem of cooperation arises in several important contexts, including public goods: everyone can enjoy the good even if they don’t pay for it, e.g., nat’l defense, public tv. common (property) resources: raw or natural resources that are own by everyone (or no one), e.g., clean air, clean water, biodiversity. Can Selfishness Save the Environment? Problem of Cooperation subject to the Free-rider problem undersupplied by a voluntary contribution scheme subject to the “Tragedy of the Commons” (Hardin, 1968) overconsumed (depleted)

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Can Selfishness Save the Environment? Arguments to the effect that “polluting is wrong” are less likely to be effective than measures that get the incentives right Our Common Future : Transboundary pollution, ozone depletion, nuclear proliferation, global warming, loss of biodiversity, deforestation, overfishing are all the consequences of continuing economic growth and development (Brundtland, 1987). Negative externalities Tragedy of the Global Commons?
Tragedy of the Global Commons? Consider a country deciding on its optimal level of economic growth (X), in the presence of a negative externality (e.g., transboundary pollution, etc.). National Utility is a positive function of own growth and negative function of overall growth (X,X’): National Utility Own Choice of X All Choices of X P(X,X’) = a(X) b(X,X’) + c Alternatively: X can be the voluntary contribution level in the case of a public good (bad); or the consumption level in the case of a common resource.

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Common Resource Game Two fishermen fish from a single lake. Each year, there are a fixed number of fish in the lake and two periods during the year that they can be harvested, spring and fall. Each fisherman consumes all
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ECS1050.05.post - Unit III The Evolution of Cooperation 7/7...

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