Wednesday, September 5, 2012

Changing Our Game

Adopting 'co-ordination models' like the Stag Hunt instead of pursuing narrow self-interest helps reduce contention and improve outcomes.

Shyam Ponappa / Sep 05, 2012

Consider the handling of irregularities in spectrum allocation and in coal mining rights. Instead of swiftly ring-fencing problem areas where there are allegations of culpability supported by prima facie evidence, then striving for good policies going forward, the ruling coalition and the Opposition are in a war of attrition. What began with the United Progressive Alliance’s turning a blind eye to the spectrum awards has turned into the Bharatiya Janata Party’s heedless flailing to tear down their opponents. Meanwhile, the confusion created by the pronouncements of the Comptroller and Auditor General and previously of the Telecom Regulatory Authority of India has vitiated conditions for constructive reform. Any solution that fails a populist screen is likely to be guillotined in the streets.

Contention versus co-operation

There seems to be quite a contrast between our manifest contentiousness and our apparent friendliness. From our chaotic ways in traffic to dealing with each other and with our surroundings more generally, often, self-centred, short-term opportunism appears to override our better nature. As evidenced in the coalgate stand-off in Parliament, or our inability to establish adequate infrastructure, this cuts across all levels of individuals and groups. The irony is that no one gains, except the perpetrators and supporters of rip-offs and stand-offs. They, too, gain only in the short run, unless they’re not caught out. In the long run, everyone is worse off except the rogues who get away.

How did we get to this self-destructive state, and how might we get out? Insights from game theory could provide some perspective. One stark fact is that our interactions are predominately driven by self-interest that leads to contention, on the lines of a Prisoner’s Dilemma,instead of a co-operative group- or common-interest model like the Stag Hunt.2

The two models are described briefly below.  For those who want to skip the description, read on after the next two paragraphs.

Prisoner’s Dilemma

Two men attempting a burglary with a weapon, A and B, are caught, with insufficient incriminating evidence for the burglary. They are questioned separately and not allowed to communicate. If both deny the burglary, they escape a 10-year sentence and will be imprisoned for two years for possession of a weapon. A is told separately that if B pleads guilty and A does not, B will get a reduced sentence of four years, while A will get 10. So A has an incentive to confess and get four years, too. A is also told that if he confesses, he can go free, while B gets 10 years. Therefore, the logical choice for A is to confess. The same logic applies to B. So, both confess and get four years, instead of both denying and getting only two years. The logical trap is that acting in one’s self-interest without communication and co-operation leads to a worse position.

Stag Hunt

A group of hunters agree to wait for a stag in their assigned positions. If one sees a hare and shoots at it, the stag takes flight and the group loses out. The group and individuals gain most if individuals stick with their commitment and get the big prize. However, individuals may be tempted to defect by a less risky, smaller pay-off like a hare.

[The original story implies that hunters must stay in their positions.  If they are tempted to chase after a passing hare, the hunt fails (if the stag comes by their post).]

Logical trap: Self-interest leads to contention and lowest equilibrium

In zero-sum games like cricket, tennis or football, where the total pay-off is the same no matter who wins, one participant gains at the expense of another. In most real-world encounters, however, players can improve their outcomes by co-operation and co-ordination. In other words, many everyday situations can be likened to non-zero-sum games, where one party’s win is not necessarily another’s loss. If individuals (or teams/groups) pursue their self-interest without co-operating and co-ordinating with other players, the pattern is like the Prisoner’s Dilemma, and a logical trap leads to a position of lowest equilibrium (the Nash Equilibrium). This position results from each player/group making the best decision that he/she/they can while taking into account the decisions of the others, and no one can act independently without worsening their position.

Co-ordinating better outcomes

By contrast, if players can (a) co-operate and (b) decide through effective co-ordination, everyone gains. Examples are centrally sponsored projects executed in Opposition-run states – for highways or power, for example – or the backing of political parties for India’s 123 Agreement with America on nuclear co-operation.

Can we escape a logical trap and contention by adopting models that elicit co-operation and co-ordination? Game theory suggests that models based on trust and co-ordination like the Stag Hunt work for a big prize (the stag). The question is whether it is possible to move to a co-ordination model and, if so, how to do it. While there are no simple fixes, the University of Vienna’s evolutionary game theory models hold out some promise through providing insights into how patterns of co-operation can spread in populations.3

There’s also the long, slow haul of structured education and training in collaborative problem solving. The techniques that need incorporation in our curricula from junior school through higher education, vocational training, and at work, are co-operative problem solving as an approach, and project management as a method. The latter starts with a clear definition of goals and objectives, followed by standard operating procedures covering the gamut of the logic of process flow for tasks, setting milestones/sub-objectives, critical paths, and individual and group responsibilities on timelines.

A second aspect where governments have to step in is institutional design — boldly initiating systems and processes after eliciting convergence in each sector from all stakeholders on sound plans in the public interest. Driven by goal-directed project management, this requires systematic action braving populist pressure and distractions.

These initiatives would significantly improve India’s ability to act in the public interest.

“The Stag Hunt and the Evolution of Social Structure”, Brian Skyrms, 2004: 

VirtualLabs, Christoph Hauert:  

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