1. 1 Social Dilemmas

2. 2 The Anatomy of Cooperation How does cooperation develop and how is it sustained in an environment where individuals are rewarded for looking out for their own interest? Social Dilemma: a situation where individually rational behavior leads to an outcome where everyone is worse off. e.g. Medical insurance Donating blood Global warming Advertising Splitting the bill Driving in rush hour Others?

3. 3 Prisoner’s Dilemma Two crooks are picked up for a small robbery and are to be locked up in separate cells for a one year sentence. The prosecutors suspect them of a string of other thefts, including armed robbery, but do not have any evidence. In order to get a conviction on these other charges the prosecutor presents each of them with the following proposal: If you confess and implicate your partner in the crime, you’ll go free and we’ll lock him up for 20 years. However, if he also confesses we’ll have to lock you both up for 5 years each. If neither of you confess you each have to finish your 1 year sentence. What should the prisoners do?

4. 4 Prisoner’s Dilemma Payoffs

5. 5 Donation Game You are alone in a room participating in a psychology experiment for pay. You are told you will be partnered with a participant you do not know who is in another room. There are two buttons in each room marked A and B. You are each given the following instructions: If you push A the researcher will give you $1. If you push B the researcher will give your partner $3. What button would a rational player press? AB A B AB A1,1 B AB A B 3,3 AB A1,14,0 B 0,43,3 A B

6. 6 Play the Donation Game What button would you press, A or B? What button would you press if you were told that the other player had already pressed A? What button would you press if you were told the other player had already pressed B? What would you press if you were told you would meet with your partner after the game to discuss the results? AB A1,14,0 B 0,43,3

7. 7 Evolution of Cooperation Social Choices: Cooperate (B) – work together for the common good. Defect (A) – seek to get what is best for you. Evolution of Cooperation: A society of cooperators will always do better than a society of defectors. A single defector in a group of cooperators will do better than the cooperators and undermine cooperation in the society. How does cooperation emerge and how can it be sustained? One answer: Repeated interactions.

8. 8 Repeated Prisoners Dilemma Repeated Strategies All-C: cooperate regardless of what your partner does All-D: defect regardless of what your partner does GRIM: cooperate on each turn, but if your partner ever defects punish him by defecting from then on. Tit4Tat: cooperate on the first move and copy your partner’s previous move thereafter Pavlov: cooperate on the first move. After that change your strategy if you get a poor results ($0 or $1), but keep your strategy if you get a good results ($3 or $4). Random: Toss a coin. Pick A if heads and B if tails. Others? Play the game 10 times in a row with the same partner. Play this repeated game with each person in your group. Record your total winnings for all games.

9. 9 Anatomy of Cooperation Characteristics of strategies that encourage long term cooperation: Be Nice Punish Defection Forgive Don’t try to be too tricky Observations All-C allows defectors to flourish. All-D does poorly when there are lots of defectors. GRIM is too harsh. Random is too random. Tit4Tat is simple, nice, punishes and forgives – but in any one-to-one battle can do no better than tie. Pavlov learns from its mistakes.

10. 10 Anatomy of Cooperation All-D vs All-D All-D: DDDDDDDDDD $10 All-C vs All-C All-C: CCCCCCCCCC $30 All-D vs All-C All-D: DDDDDDDDDD $40 All-C: CCCCCCCCCC $0 T4T vs T4T T4T: CCCCCCCCCC $30 All-D vs T4T All-D: DDDDDDDDDD $13 T4T: CDDDDDDDDD $9 In a 50/50 split of All-D and T4T All-D’s get ($10+$13)/2 = $11.5 T4T’s get ($30+9)/2 = $19.5 In a 50/50 split of All-C and All-D All-D’s get ($10+$40)/2 = $25 All-C’s get ($0 + $30)/2 = $15