When sanctions cause non-cooperative behavior in a social dilemma situation: a study using the “Industrial Waste Illegal Dumping Game” 13th International Conference on Social Dilemmas, Kyoto, JAPAN, August 20-24, Session 2: Structural Solution. August 21, 2009 Susumu OHNUMA Department of Behavioral Science, Hokkaido University‏

2 Implementation of surveillance and penalty in social dilemma Naïve economic theory says – Sanctions like surveillance and penalty would reduce non- cooperative behavior as they change incentive, i,e, non- cooperative behavior become less profitable – Only the cost for introducing sanctions is the issue in the second order dilemma Some social psychological studies in social dilemma say – Surveillance and penalty are not always effective in reducing non-cooperative behavior – Communication and sharing information are more important for cooperation (Dawes, et al, 1990; Orbell et al, 1988) – However, few studies have shown sanctions decrease cooperative behavior This study demonstrates that penalty and surveillance reduce cooperative behavior even when the cost is not taken into consideration

3 What is “Industrial Waste Illegal Dumping Game” (IWID-G) ? Simulated the problem of illegal dumping about industrial waste management in real world – Some key social structures are evoked in IWID-G, e.g. responsibility to producing industries, obligation of management sheet, one way flow of waste etc. Explicitly inserted social dilemma structure – Every player is required to maximize own benefit, though there are five different types of player and payoffs are different by the type – Every player can choose to be cooperative or non-cooperative, though not the choice between one of the two but continuous function, and non zero sum C: Appropriate process of industrial waste, paying enough commission money Non-C: Illegal dumping, not paying enough commission – Time lag of the consequence of non-C All players have to pay for environmental restoration expense according to the amount of illegal dumping after all sessions have finished

Rule of the IWID Game (1) types of players and roles Every player has to pay commission to the next player The first management sheetThe second management sheet Money waste Money waste Money waste money waste Producing Industry The second carrier The first carrier Terminal Industry Mid-process Industry produce money and waste Carry waste from producing industry to mid-process industry Can reduce waste Carry waste from mid- process industry to terminal industry reclaim waste in landfill

reclaim waste in landfill, but need cost for it Can reduce the waste, but need cost for the reduction Flow of bargaining of Waste The first carrierThe second carrierProducing industry Mid-process industry Terminal industry waste money The first management sheet The second management sheet Appropriate process The only player who can amass capital in the game Every player does not know about the payoffs of any other types of player each other. Players who can move around are only carriers. Three types of industry cannot move around.

Flow of bargaining of Waste Illegal dumping Anyone can do illegal dumping. Nobody knows that who did and how many have done the illegal dumping.

Illegal dumping is more profitable than following appropriate process for every individual in short term, but the more the illegal dumping, the less the profit it brings to all players overall Rule of the IWID Game (2) Social Dilemma Structure Illegal dumping have impact on environment. All players have to pay for environmental restoration expense according to the amount of illegal dumping after all sessions have finished Producing Industry The second carrier The first carrier Terminal Industry Mid-process Industry

Rule of the IWID Game (3) producing industry The first management sheetThe second management sheet Producer industry is fined much money if she/he fails to obtain one of the first and second management sheets Producing industry has to take on four times of environmental restoration expense compare to the other players by illegal dumping Producing Industry The second carrier The first carrier Terminal Industry Mid-process Industry The only player who can amass capital in the game responsible for management

Experiment 1: manipulation of surveillance Three conditions are set to compare the effect of surveillance Three conditions are set to compare the effect of surveillance producer surveillance condition: players of producing industry, who are the most responsible for managing the waste, could watch other players, keeping in touch with management sheets （ producers have incentive to reduce illegal dumping because they have to take on more expense for illegal dumping ） G-men condition: G-men condition: a person called G-men, who are outside the industries, was watching around the players （ The reward of G-men is decided by the amount of illegal dumping, so that they have incentive to reduce illegal dumping ） Control condition: No surveillance 9 Exp.1

10 Methods 3 games for each condition, 9 games in total, were conducted – 111 students participated in total people participated per game – There are at least two persons in one type of player, so as to have choices to hold a contract of commission all players are requested to maximize their property (received rewards based on the property after finished the game), except for G-men. Exp.1

Result 1: amount of illegal dumping Illegal dumping was the most in producing industry surveillance condition Exp.1 11

Results 2 ： change in illegal dumping rate by session Rate of illegal dumping decreased accross session in all conditions, however, the decrease was lesser in producer surveillance condition Exp.1 12

Results 3: earned commission by types of player Earned commission money (s/10t) was less in producer surveillance condition, which indicates that players did not pay enough money for doing appropriate process to the next players Exp.1 13

Information about industries was progressively shared accross session in all conditions, however, less shared in producer surveillance condition Results 4: pattern of shared information process Exp.1 14

Results ： Questionnaire after game (average by 7-point scale) Exp.1 Players had negative attitude toward cooperation in producer surveillance condition

Summary of Experiment 1 We succeeded in demonstrating that surveillance does not decrease non-cooperative behavior, rather it brings negative effect Prevention of mutual cooperation Spiral of non-cooperation If responsible person for management conduct surveillance – Did not pay enough money – Did not share information – Focused on own benefit, not on all players We can interpret that surveillance frames players into self-focusing, i, e, players consider the situation as non- cooperation is default Exp.1 16

Counterargument In experiment 2, both surveillance and penalty are implemented  To demonstrate that clearer penalty causes tragedy, spiral of non-cooperation You may claim that surveillance had negative effect because there was no penalty which leads to insufficient incentive. If there is strong penalty with surveillance, who would do non- cooperative behavior?! You may claim that surveillance had negative effect because there was no penalty which leads to insufficient incentive. If there is strong penalty with surveillance, who would do non- cooperative behavior?!  Actually, it was observed that those who were detected having illegal dumping were left out of business, which is regarded as a kind of penalty But 17

Experiment 2 ： implementation of penalty Three conditions are set to compare the effect of surveillance and penalty Three conditions are set to compare the effect of surveillance and penalty Penalty condition: G-men who are outside of the industries was watching around the players. If G-men witness illegal dumping, the detected player was levied on a fine with 2S per 5t. Surveillance only condition: G-men who are outside of the industries was watching around the players. Even if G-men witness illegal dumping, the detected player does not levied on a fine (but will be reported to other players and may be left out of business) Control condition: There is no G-men, no person to watch around. If someone witnesses illegal dumping, the detected player does not levied on a fine 18 Exp.2

3 games for each condition, 9 games in total, were conducted – 121 students participated in total people participated per game – There are at least two persons in one type of player, so as to have choices to hold a contract of commission all players are requested to maximize their property (received rewards based on the property after finished the game), except for G-men. Methods 19 Exp.2

Results 1: amount of illegal dumping Illegal dumping was the most in penalty condition Exp.2 20

Results 2: change in illegal dumping rate by session Illegal dumping did not reduce across session in penalty condition Exp.2 21

Result 3: illegal dumping by types of player Producing Industry and First carrier did much illegal dumping in penalty condition If you don’t trust the next player, you’d better do illegal dumping by your own! Exp.2 22

Results 4: efforts to get information (questionnaire after game)  Producing industry did not try to share information about the other players’ payoff in penalty condition  Many players, especially producing industry, tried to share information in control condition, which has no surveillance and no penalty Exp.2 23

Summary of Experiment 2 We succeeded in demonstrating that penalty is not necessarily reduce non-cooperative behavior, rather it brings about negative effects If players are imposed on fine with surveillance – Don’t pay enough money to next players – Do illegal dumping by themselves, instead of commission – Don’t make efforts to share information It is interpreted that penalty frames the game as a distrust situation and reduces motivation for cooperation, especially for producing industry who has to trust all other types of player If no penalty, such things do not take place Exp.2 24 Spiral of non-cooperation destruction of whole system

Conclusion 25 We succeeded in demonstrating that penalty and surveillance reduce cooperative behavior even when the cost can be ignored

Thank you for your kind attention

Rule of the IWID Game (3) Mid-process and terminal industry Appropriate process of reduction of waste and landfill give much less impact on the environment than illegal dumping Producing Industry The second carrier The first carrier Terminal Industry Mid-process Industry Mid-process industry can reduce the waste appropriately but it takes cost for the appropriate reduction Terminal industry can reclaim waste in landfill appropriately but it takes cost for the appropriate landfill

Relation between appropriate mid-process reduction and landfill and profit for all players The more people follow appropriate process, the more profit all players Summation of profit for all players Amount of mid-process reduction Amount of landfill

Rule of the IWID Game (5) mobility Carriers are easy to obtain information about other players’ payoff, while industries are difficult to obtain such information Three industries cannot go to other players’ area The first and second carrier can move around everywhere in the room Producing Industry The second carrier The first carrier Terminal Industry Mid-process Industry

Waste Money The first management sheet The second management sheet producer surveillance condition Producing Industry The second carrierThe first carrier Terminal Industry Mid-process Industry Producing industry can conduct surveillance by chasing management sheets

G G-men condition Producing Industry The second carrierThe first carrier Mid-process Industry Terminal Industry

Results: amount of illegal dumping by types of players The second carrier and terminal industry in producer surveillance condition tend to do more illegal dumping because they received less money for appropriate process 32 Exp.1

Results 5: self reported cooperation (questionnaire after game)  Producing industry cooperated with neither same type nor other types of players in penalty condition Exp.2 33