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. 3150.