4 - Social Interactions Flashcards
(36 cards)
What is a social dilemma?
Individuals independently pursuing their own private objectives that result in a socially suboptimal outcome.
What is the ‘tragedy of the commons’?
Resources not owned by anyone (Earth’s resources, fish stocks etc.) are easily overexploited unless access is controlled.
What was the initial solution for social dilemmas?
- Altruism
- Government intervention (preventing landfill by adding a landfill tax UK)
- Community behaviour regulation (social norms)
What is a strategic interaction?
When people interact, and they are aware of how their actions affect others.
What is a strategy?
An action that a person may take when the person is aware of other possible actions.
What is a game?
A model of strategic interaction.
What is game theory?
A set of models of strategic interactions.
What is a dominant strategy?
Action that yields the highest payoff regardless of the actions of other players.
What is a dominant strategy equilibrium game?
Outcome where all players play their dominant strategy.
What does a dominant strategy equilibrium game lead to?
An outcome that is:
* the best possible for each player
* socially optimal
What is the prisoner’s dilemma?
A game in which dominant strategies result in a socially suboptimal result.
What are the aspects of an interaction that cause an unfortunate outcome in the prisoners’ dilemma game?
- Costs on the other agent not considered (i.e. not internalised)
- No way to get legal reconciliation
- Inability to make agreements beforehand
What is a social preference?
Value placed on what happens to other people, even if it results in lower payoffs for the individual.
What is a zero-sum game?
The sum of payoffs sum to 0.
What shape does an IC curve have for an altruistic individual?
Downward sloping
What shape does an IC curve have for a self-interested individual?
Vertical.
Draw the diagram of a self-interested individual and an altruistic individual where they choose a payoff between themselves and another in a zero-sum game.
How do you account for costs on the other agent not considered (i.e. not internalised)?
If an individual is somewhat altruistic.
How do you account for no way to get legal reconciliation?
Accounting for repeated games.
How does accounting for repeated games solve the problem of no reconciliation?
By being able to target free riders over repeated games, even self interested individuals will look to be “altruistic”.
Why do contributions to public goods fall over time?
Without the opportunity for peer punishment.
Disappointment of the expectation of reciprocity.
How can contributions to public goods be sustained in the long-run?
The opportunity for peer punishment.
Why can peer punishment backfire?
It adjusts the frame that an individual has.
Frame shifts from moral obligation to economic incentive.
If this occurs, it can be said that incentives have crowded out social preferences.
How can individuals acting independently result in a cooperative outcome?
- Invisible hand
- Repeated prisoners’ dilemma
- Public goods game
