The Prisoner’s Dilemma & Distributive Justice
Philosophy 146 / Political Science 103 / Economics 103
Tuesday - Thursday 4:25 PM- 5:40 PM
Instructor: Michael Munger
Office: Perkins Library, Room 338
Home phone: 919 844-0154
(rev 8-2-11)
Fall 2011
French Science 2231 at Duke / Howell 104 at UNC
munger@duke.edu
Office phone: 919 660-4301
Cell phone: 919 369-6453
Teaching Assistant: Rebecca Hatch
rebecca.hatch@duke.edu
Office Hours: By Appointment
NOTE: Each student must meet individually with Ms. Hatch no later than Oct. 15!!
skip to readings & lecture schedule
Duke Academic & Exam Calendar
INTRODUCTION
The course centers on historical and contemporary attempts to understand the factual nature, and the
normative foundations, of the most powerful of our social and political institutions—the market and
the government that enforces it. It thus intersects the scientific and the moral agendas of economics,
political science and philosophy. Our aim is to illustrate how all of these three disciplines are
indispensible to most of the factual and normative questions faced by each of them.
The course will repeatedly come face to face with problems of coordination and cooperation in groups
of humans, and for that matter in any collection of independent organisms. These are problems of
economic efficiency in coordination and ethical problems of justice in distribution, or access to
resources and power.
To understand “social cooperation” one needs to understand the problems that social cooperation has
to overcome. Here game theory is the most important tool for economist, the polical scientist, and even
for the political philosopher. We therefore focus much of the course on this subdiscipline. One game in
particular, the prisoners’ dilemma is a foundational element in the study of social institutions. We will
begin with the PD in its simplest form and then extend to the iterated case and the more relevant manyperson version. We shall deal with the theory of public goods, and offer several applications of PD
reasoning, including the Hobbesian account of the origin of the state, the Lockean account of the origin
of property, and the Humean and Demsetzian accounts of the origin of property rights. We will
consider the experimental evidence in relation to PD and social dilemma games. We also examine the
related “trust problem” and its implications for the possibility of pre-commitment.
We will repeatedly exploit game theory to illuminate the problem of justice, distribution, and control
and direction of power. The object of this part of the course is two-fold: first to examine an issue that is
of enormous interest in its own right: second, to isolate the disciplinary differences and
complementarities in the philosophical, political and economic approaches to this issue. So we shall
consider the pure ‘ethics’ of distributive justice as understood by Marx, Rawls and Nozick. We shall
1
also deal with the feasibility of various distributive schemes, focusing on “incentive effects” and their
implications. Finally, we bring together the problem of coordination and distribution by examining the
problem of power in anarchic systems, examining the work of North, Ostrom, and others.
LINKS TO RESOURCES:
 Citations Practices: http://library.duke.edu/research/citing/
 Duke’s Community Standard: http://integrity.duke.edu/new.html
 Holes, First Rule of: Stop digging, and get some help!
http://www.studentaffairs.duke.edu/caps
 Illness / Excused Absences: http://trinity.duke.edu/academicrequirements?p=policy-short-term-illness-notification
 Plagiarism Defined, and Avoided: https://plagiarism.duke.edu/
 Writing help: http://uwp.duke.edu/writing-studio
ASSIGNMENTS & GRADES

One (10-12 page) Paper (30% of final grade): You will be asked to write one paper, of no
more than 12 typed, double-spaced pages, or 3,000 words, whichever is smaller. The paper will
be due Thursday, December 8, at the beginning of class. Papers not turned in at that time
will be considered late, and late papers will lose a letter grade per calendar day. Papers turned
in after class on that day will be counted as one day late. Each student, and there will be no
exceptions, must have a meeting with the Teaching Assistant, Ms. Hatch
(rebecca.hatch@duke.edu), to present an outline of the proposed work and to provide a
tentative list of references. These references cannot simply URLs or references to Wikipedia
found on-line.

Class Assignment—Choose and Play a Strategy, or finite state automaton (FSA) (15% of final
grade): You will be asked to choose one of 16 strategies, or “players,” for an Axelrod style
tournament. Your FSA will be played against all n FSAs in the class (yes, that means you will
play against yourself), PLUS a number of wolves (always attack) and sheep (always
cooperate). In order to get above an “8” on this assignment, you have to have above the median
score for the entire class. For more information, see this web site. You will be asked to choose
one of the 16 strategies, and you must write a one-page essay on why you made this selection,
given that your induced goal is to come in first in the tournament.) The FSA is due on
Thursday, November 3, 2011.

Midterm Exam (25% of final grade): The midterm will be partly multiple choice, partly short
answer essay questions. Practice questions will be handed out the week before the exam is
given.

Final Exam (30% of final grade): Standard blue book exam, in the regularly scheduled exam
period (Friday, December 16, 7 pm). The final will be comprehensive, with an essay format.
Questions for the final will be provided in advance, and the actual questions to be asked will be
2
selected using a fair six-sided die. Full credit will only be given for answers that integrate the
material in the course, rather than simply regurgitating back the separate parts.
EXTRA CREDIT FOR SPEAKERS:
There are four outside speakers this fall in the PPE Lecture Series. For each one you attend, you will
receive 1/2 point extra credit on the midterm. If you attend all four, in other words, that will give you
2 points on the midterm, AFTER the curve (if any) is decided. This can often make the difference
between a B+ and an A-. Besides, the talks are excellent, and well worth your time on the merits.
Here is the schedule of talks:
Wednesday, September 7: John Lewis, Duke University: “Morality of Exchange in Greece and
Rome” 4:15 pm in Physics 130
Wednesday, September 28: Steve Margolis, NC State University, “Path Dependence, Anti-Trust, and
Intellectual Property” 4:30 pm in Soc Psych 130
Wednesday, October 12: William Gradison: “Financial Regulation” 4:30 pm in Soc Psych 130
Wednesday, November 2: Timur Kuran, Duke University: “The Economic Institutions of Islam” 4:30
pm in Soc Psych 130
TEXTBOOKS
The following four books (listed here alphabetically) are on order at the Duke Textbook Store.
 Axelrod, Robert. Evolution of Cooperation, Basic Books
 Gaus,Gerald., On Philosophy, Politics, and Economics, Wadsworth
 Munger, Michael, Analyzing Policy, WW Norton
 Ostrom, Elinor, Governing the Commons, Cambridge
In addition, there are a number of different readings available in electronic format on the web. In most
cases, these can simply be obtained by clicking on the reading in the on-line version of this syllabus,
which will direct your browser to a pdf or html version of the required text.
In the case of both the books and the reserve readings, the last name(s) of the author(s) constitute(s) a
unique identifier.
Back to top
TOPICS AND READINGS (schedule subject to change, with notice by email)
(FOR UNC STUDENTS: NO CLASS TUESDAY 8-23 or THURSDAY 8-25!!!)
Aug 30, Introduction
Housekeeping problems, introductions, class overview, examination of the syllabus, and a lecture.
3
Reading:
 Hardin, Russell. 1989. “Rationally Justifying Political Coercion. Journal of Philosophical
Research, v. 15, pp. 79-91. (Sakai Readings)
 Munger, Michael. The Thing Itself. Indianapolis: Liberty Fund.
http://www.econlib.org/library/Columns/y2005/Mungerthing.html
Sept 1, 6: Deciding in Groups
Reading
 Hinich and Munger manuscript, Chapters 1-3 (Sakai Readings)
 Munger, Analyzing Policy, Chapter 2
What do I want? What do you want? What does it mean to say "we want," if we disagree? Where do
preferences come from, and does it make sense to say that a group has preferences, if the group is not
unanimous?
Sept 8, 13, 15 : The Competitive Market as a Description/Prescription
(ALSO: Visit from Catherine Shreve on Sept. 13, first half of class, on using sources and references in
your paper!!)
Reading:
 Gerald Gaus, On Philosophy, Politics, and Economics, Chapters 1-3
 Munger, Analyzing Policy, Chapter 3, “Case Study” (Radford Article) , Chapter 4.
The descriptive problem—The competitive market model fails to account for many features of actual
markets, because its assumptions are not realized. When economic interactions are strategic, which
may be most of the time, it has little to contribute to our understanding.
Moreover, its existence presumes the solution to a number of major problems of
coordination/cooperation. This is the prior problem.
The normative problem—Simply assuming the moral desirability of market outcomes begs a number
of important questions about equity, justice and most of all, welfare. Even if one concedes that
markets are efficient at producing wealth (and one might not!), then the moral value of markets is still
debatable. Are markets compatible with any reasonable vision of the good society?
We begin by expounding some of these problems: market failure, problems of rationality and other
idealizations, and the limits of welfare economics.
Sept 20, 22: The problem of spontaneous order
Reading:
 Norman Barry, The Tradition of Spontaneous Order, “Adam Smith, 1723-1790”
4


F. Hayek, "The Use of Knowledge in Society," American Economic Review, 1945. (LOEAL
Link)
Munger, Michael, “Euvoluntary or Not, Exchange is Just.” Social Philosophy and Policy.
28(2): 192-211. (Sakai Reading)
The prior problem--Emergence of the institution of the market and preexistence of institutions it
requires—trust, fiat money, firms, division of labor. Spontaneous order is actual. How is it possible?
Philosophers want to know why we should obey the law. Social scientists want to know whether we do
obey the law (if we do). Social scientists are more likely to focus on why social and political
institutions (like laws) exist, how they emerge, why they persist, how they differ and why they change.
As Hume argued in “Of the original contract”, institutions don’t emerge by decision or design. Nor can
coercive force alone maintain them. One explanation which has emerged in recent decades depends on
the notion of ‘spontaneous order.’ Spontaneous order is simply the appearance, with no external
direction or coercion, of ordered processes. F.A. Hayek’s conception of spontaneous order goes
something like this: The theory of spontaneous order is concerned with those regularities in society, or
orders of events, which are neither
 the product of deliberate human contrivance (such as laws or economic planning) nor
 purely natural phenomena (something like gravity, or the weather, which exist in complex and
apparently orderly forms independent from human actions).
Spontaneous orders, in this sense, are conventions, regularities, and social practices arising from
human action but which are not the result of any specific human intention. But we can’t just assume
the existence of spontaneous orders in the social or economic realm any more than we can assume the
moral rightness of political cohesion. That is, one would have to demonstrate that spontaneous orders
really exist, since it is by no means obvious.
Sept 27, 29: Normative problem of welfare economics
Reading:
 Economics and Economic Justice. and Distributive Justice, Stanford Encyclopedia of
Philosophy.
 Munger, “Euvoluntary Exchange and the Difference Principle,” Philosophy, Politics, and
Economics (forthcoming).
 Munger, Analyzing Policy, Chapters 4, 5, and 8
Given the weakness of the Pareto criterion, how do we choose among Pareto optimal outcomes?
Alternative political philosophies: Rawls, Nozick are introduced and discussed. How do we justify the
enforcement of institutions and rules?
Oct 4, 6: The Need for Prior Political Institutions, Coercion, and Trust
Readings:
 Jonathan Bennett’s “translation” of Hobbes’ Leviathan, Chapters 1-31
 Jonathan Bennett’s “translation” of Locke’s Second Treatise, Chapters 1-6
5

David Hume, Of the Original Contract and Of Passive Obedience
How can someone, or some group, morally exert coercive power over one or more other competent
adults, forcing them to do something against their will? We don’t mean just the successful use of force,
in the sense that the other person's behavior is compelled. We want to ask what legitimates the use of
force by a government to compel adherence to government edicts or laws. This question is normative,
not empirical or descriptive — we want to know what makes the use of power morally right, not
merely what causes a government to use force or makes force effective in producing obedience.




divine authority either depends on unverifiable religious claims or it forces us to accept that
anyone who successfully gains political power has political authority.
natural subordination relies on dubious empirical assumptions about the inequalities among
people, and even so cannot account for political authority over those in the elite.
perfectionist theories of political authority assume that there can be a group of people who have
clear knowledge of what is good for a community. But even if this were possible, it implies that
no other governments have had any political authority.
consent based theories seem more plausible, but they need to answer many questions to
succeed, such as: Who needs to consent? What about individuals who don't consent? What
constitutes consent? What are the limits of the authority gained by this consent?
FALL BREAKS:
No class for Duke Students on October 11, Tuesday; UNC students will
meet with me in Howell 104 for a review session for the midterm
Oct 13, 18: Game Theory to the Rescue? And evolution?
(NOTE: BEGINNING OCTOBER 18, WE MOVE TO THE UNC CLASSROOM,
HOWELL 104!! Change of Venue…)
Reading:
 Prisoners Dilemma Stanford Encyclopedia of Philosophy
 Play a PD on-line (What strategy does Serendip play?)
 Axelrod, Evolution of Cooperation (entire)
 K. Binmore, Review of Axelrod’s Complexity of Cooperation
 Gaus, On Philosophy, Politics, and Economics, Chapter 4
We take up the Prisoner's Dilemma (PD) as a model for rationality of cooperation and acceptance of
enforcement. No solution to the PD: Can we model the moral problem of legitimizing state coercion
as a PD? Can we model the obstacle to spontaneous order as a PD? The “prisoner’s dilemma,” in its
classic form, is always a 2x2 game with the following properties:
6
 There is exactly one Nash Equilibrium
 There is exactly one Pareto Optimum
 The NE and the PO are different. That is, the PO is not a NE.
There are many other games that are related, but only 2x2 games with these properties are PDs.
Question for discussion: how wide spread are PDs, as an empirical matter? Are they simply
intellectual exercises, or do they teach us something about the world?
Formal game theory v evolutionary game theory, folk theorem: Can game theory and evolutionary
theory give us an account of rationality that explains our conception of justice? Can it also provide an
answer to the question, why should we be just? And even if the answer is “yes,” is such a contractual
understanding reflected in stable social and psychological processes in human societies?
Define solutions to strategic games—NE, DS, illustrate with various games.
PD not the right model of the game of escaping state of nature. Hobbes said, “Covenants, without the
sword, are but words.” Is that true? Or can cooperation emerge from an anarchic setting? In other
words, can groups of organisms cooperate without external coercion or design?
Axelrod Tournament: In PIZZA We Trust
Axelrod Tournament Demo Page (NOTE: You have to choose your own strategy, and play an nxn
tournament. Assignment due November 3!! You are graded in part on your competitive
performance…). The tournament will be held over at UNC, and led by redoubtable Mr. Sparks, who is
deceptively lifelike. The night will be determined early on. Attendance is optional, but we will have
pizza and it's pretty darned fun.
midtermmidtermmidterm midtermmidtermmidterm midtermmidtermmidterm midtermmidtermmidterm
Oct 20: Review for Midterm for Duke Students (UNC Students on Fall
Break) (French Sci 2231)
Oct 25: In-class Midterm. NOTE: If you know now that you cannot attend
this midterm, let me know immediately. Only medical excuses will be
accepted after September 15.
Oct 27, November 1: Norms and Passions—Can they solve the problem? Emotions as
Commitment Devices
Reading:
 Barash, David. “The Biological Roots of Anger.” Chronicle of Higher Education, July 16,
2010. (Link)
7




Corning, Peter. “The Fairness Instinct.” Chronicle of Higher Education, April 24, 2011.
(Sakai reading)
Ostrom, Elinor, Governing the Commons, Chapter 1
Elster, Jon. “Rationality, Emotions, and Social Norms. Synthese. v. 98. (JSTOR Link)
Wilson, David, and Rick O’Gorman. “Emotions and Actions Associated with Norm-Breaking
Events.” Human Nature, 2003. (Link)
If we could all simply agree to behave morally, society would be better off. One could argue that moral
action is intrinsically better, but it also follows from the fact that transactions costs and monitoring /
enforcement costs are much lower, enabling many more welfare-enhancing transactions to take place.
Can we agree to be moral, since it is universally good (but perhaps individually worse) to be moral?
Can we shape peoples’ preferences, to make them like behaving morally? Is it possible, as Rousseau
suggested, to inscribe the law, not in books, but on men’s hearts?
Nov 8, 10: Justice and Property?
Reading:
 Hume, A Treatise of Human Nature, book 3 Sections 1-6.
 Locke, Two Treatises, Book II, Chapters 1-5 (section 1-51)
 Smith, Adam. On Primitive Accumulation, Wealth of Nations, Bk II, Introduction
 Marx, Karl. Capital , Chapter 1 and Chapter 26
 Rawls, Theory of Justice (Chapters 1 and 3) (e-reserve)
Locke treats property as a natural right. And Hume seemed to think that justice was exclusively a
matter of property rights. It emerges when property does, and does no more than govern our actions in
regards our own and others property. How, we want to ask Locke, can he be so sure that there are
natural frights in property? According to Hume such rights emerge spontaneously and suggest
themselves to our self interest. Is there a good argument for this claim?
Nov. 15, 17: Justice and Equality
Two great problems of political philosophy have always been the question of what justice consists in,
and why I should be just (especially when no one is looking). These are the two questions that
absorbed Plato in The Republic. (Don’t worry; we won’t make you read it). Instead, let’s consider
some classic views: Rousseau’s (for now) and Locke’s and Rawls’. It will be evident that though some
of us may endorse Rawls’ view, his conclusions certainly do not serve our interests. So why honor his
claims? Shouldn’t we expect justice to be rationally defensible? This raises the question of what
“rational defensibility” is. And on the economist or rational choice theorists’ definition of rationality,
the answer is simple: acting justly is not rational. But the moral philosopher has no alternative
definition that doesn’t simply beg the question. Or does he? (note on question begging).
Readings:
 Rousseau, Discourse on Inequality
 Demsetz, Harold, "A Theory of Property Rights," American Economic Review, May 1967
8





Hardin, Garrett, “Tragedy of the Commons”, Science, 1968 (Bonus: A painfully earnest
woman interviewing Dr. Hardin, video)
Ostrom, Governing the Commons, Chapters 2-5
Munger, Michael. “Euvoluntary Exchange and the Difference Principle.” Philosophy, Politics,
and Economics. (Sakai)
Madison, James. "Property" (1792). http://presspubs.uchicago.edu/founders/documents/v1ch16s23.html
Nozick, Robert. Anarchy, State, and Utopia, Selections on Sakai.
November 22, 24: No Class, Thanksgiving Break.
Two Podcasts:
1. This American Life (NPR): "The Invention of Money" http://www.thisamericanlife.org/radioarchives/episode/423/the-invention-of-money
2. LSE, Paul Krugman, "The Return of Depression Economics" (Part I)
http://www2.lse.ac.uk/newsAndMedia/videoAndAudio/channels/publicLecturesAndEvents/player.asp
x?id=364
November 29, December 1, 6: Game Theory in Political Science.
(CLASS BEGINS WITH MINI-TEST ON PODCASTS!!!! DON’T FORGET)
Readings:
 Gerald Gaus, On Philosophy, Politics and Economics, Chapters 5 and 6.
 Hume, Of the Balance of Power
 Munger, Michael. Analyzing Policy, Chapter 6.
 James Morrow, Alliances: Why Write Them Down? Annual Review of Political Science, Vol.
3. (Jun, 2000), pp. 63-83.
 Olson, The Logic of Collective Action (excerpt, e-reserve)
 Shepsle, Kenneth, and Barry Weingast. “Structure Induced Equilibrium and Legislative
Choice.” Public Choice. 1981. (Sakai)
 Duncan Snidal, “Coordination versus Prisoners’ Dilemma: Implications for International
Cooperation and Regimes,” American Political Science Review, 79 (4): 923–942 (Dec. 1985).
 Wagner, Harrison, The Theory of Games and the Balance of Power World Politics, Vol. 38,
No. 4. (Jul, 1986), pp. 546-576.
Collective Action, Collective Choice, and Spatial Competition
Is there an answer to the problem of enforcement and moral action at the level of nations, rather than
individuals? Can self-control, rather than deterrence, be the basis of peace? Or does self-interest and
self-preservation dominate all other considerations?
December 9: Last Class—Overview and Wrap-up
Exam(s) for this class (NOTE: You can take EITHER, as you please):
9
Friday, December 16 (Duke Students)
7:00-- 10:00 pm
Friday, December 16 (UNC Students)
4:00 – 7:00 pm
Back to top
Back to top of readings
Appendix on QUESTION-BEGGING
A usage note: the phrase “begs the question” has a very specific meaning in philosophy. To say that “you are
begging the question” does not mean that what you just said requires some other question be asked.
Instead, it means that your claim assumes an unargued premise, or is circular. Any misuse of this phrase
in this class will result in immediate public flogging.
Correct usage: “You can’t say that sweet vermouth is the embodiment of universal good just because you like
it. You are begging the question.”
Incorrect usage: “Well, sure, once President Bush was there he just HAD to puke in the Japanese Prime
Minister's lap. But that begs the question, ‘Why did he do all those Jagr shots in the first place?’” (The
video is here)
Academic Calendar (Duke)—Fall 2011
August 29 Monday. 8:30 a.m. Fall Semester classes begin; Drop/Add continues
September 5 Monday. Labor Day. Classes in session
September 9 Friday. Drop/Add ends
September 22 Thursday. 4:30 p.m. Founders' Day Convocation
September 25 Sunday. Founders' Day
October 7 Friday. Last day for reporting midsemester grades
October 7 Friday. 7:00 p.m. Fall break begins
October 12 Wednesday. 8:30 a.m. Classes resume
November 2 Wednesday. Registration begins for Spring Semester, 2012
November 11 Friday. Last day to withdraw with W from Fall 2011 classes
November 16 Wednesday. Registration ends for Spring Semester, 2012
November 17 Thursday. Drop/Add begins for Spring 2012
November 22 Tuesday. 10:30 p.m. Thanksgiving recess begins
November 28 Monday. 8:30 a.m. Classes resume
December 2 Friday. Graduate classes end
December 3 - 12 Saturday-Monday. Graduate reading period
December 9 Friday. Undergraduate classes end
December 10 - 12 Saturday-Monday. Undergraduate reading period
December 13 Tuesday. Final examinations begin (9:00 a.m.)
December 18 Sunday. 10:00 p.m. Final examinations end
10