Game theory: the way forward? (part 3 of 3)

In our previous two posts, we identified a blind spot in the work of John Rawls and Bob Nozick: the problem of betrayal–what game theorists call “defection.” In brief, Rawls’s original agreement might embody timeless principles of justice, and Nozick’s private protection groups might be the first step towards his political utopia, but in both cases, there is nothing stopping people from repudiating their mutual promises or double-crossing each other. What is the way forward, then?

Game theory offers some possible solutions to this trust dilemma. Even in the case of the deservedly famous Prisoner’s Dilemma, where fear of the dreaded “Sucker’s Payoff” leads the prisoners to betray each other (see below), Robert Axelrod and the late Bill Hamilton identified the conditions in which cooperation might yet still be possible: iteration (i.e. playing the game more than once) and uncertainty as to when the last round of the game will occur. But there is also a major blind spot with Axelrod and Hamilton’s work and with game theory generally. In addition to our two prisoners, game theorists silently assume a third player: a judge or strongman who is able to distribute the payoffs of the prisoner’s game and enforce its rules. But who is this secret third actor or deus ex machina? Where does he come from? Why should the prisoners pay him any heed?

In short, overcoming the problem of betrayal/defection–getting cooperation off the ground–appears to be a truly intractable problem, and yet we still see many examples of cooperation and mutual trust around us. Is there a better way of explaining the puzzle of cooperation? Is there a new way forward, one that does not rely on unenforceable original agreements (Rawls), or on ahistorical mutual protection agreements (Nozick), or on secret third-party payoff enforcers (Axelrod & Hamilton and all game theorists generally?) We are certainly open to suggestions …

Where is Player C, i.e. who distributes these payoffs and enforces the rules?

About F. E. Guerra-Pujol

When I’m not blogging, I am a business law professor at the University of Central Florida.
This entry was posted in Cooperation, Game Theory, Law, Philosophy. Bookmark the permalink.

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