Common Collective Dilemmas Jamie Monogan University of Georgia August 20, 2014

Objectives By the end of this meeting, participants should be able to: Explain the premise behind several common games: the collective-action problem, the coordination game, the prisoner’s dilemma, the free-rider problem, the tragedy of the commons, and the principal-agent problem. Describe the role of institutions in resolving collective dilemmas.

Prisoner’s Dilemma Strategic interaction where each actor is better off with cooperation, but each is incentivized to not cooperate

A Political Campaign Prisoner’s Dilemma

Collective-Action Problems Large-scale Prisoner’s Dilemma People want to see public good provided –Public vs. private goods Individuals have no incentive to provide it: free-riding occurs (e.g., the free-rider problem is a synonym) Effective enforcement is required to solve problem Danny DeVito summed this up in Tin Men Special case: the Tragedy of the Commons

Coordination Problems Group wants to act in common, but cannot agree on solution –Where to meet for lunch? –Which side of the road to drive on? –Which candidate to support?

Unstable Coalitions Collective agreements can be undermined in the face of competition Losers in original coalition have incentives to make “better” offer to some coalition members Minimum winning coalitions are more susceptible to coalition “raiding”

Unstable Coalitions Unstable coalitions can undermine collective decision making –No final decision ever made Agenda setters can help by restricting options available to the group

Principal-Agent Problems Principals hire agents to do some task for them –Car mechanic –Doctor Principal cannot be sure agent is acting faithfully –Information asymmetry exists between principal and agent

Principal-Agent Problems These problems also exist in government All elected officials are agents of the voters Elected officials delegate tasks to bureaucrats and bureaucratic agencies

Institutions Institutions are formal constraints on behavior Can be large and complex or a rule within a larger institution Institutions help solve collective dilemmas –How does the mafia affect the prisoner’s dilemma? –How do committee chairpersons affect unstable coalitions? –Thomas Hobbes: Government solves “war of all against all.” –Institutional design affects distribution of benefits in society –Can be inequitable: large vs. small states

Institutions

Assignments For Friday: Read Bullock & Gaddie, Interlude: votefordanae.com Be prepared to talk about this reading in your discussion section. For Monday: Read Kollman, pp