Week 5 - Social Dilemmas Flashcards
What is a social dilemma?
When an individual doesn’t adequately consider the impacts of their decisions on the outcomes and wellbeing of others, resulting in ‘socially suboptimal’ outcomes.
Name and describe the 2 social dilemmas.
Tragedy of the commons - when common property/resources is overexploited
Free riding - when individuals benefit from a cooperative project in which others contribute but they do not contribute themselves
What is a social interaction?
A situation involving two or more people in which the actions of an individual impact themselves and others.
What is a strategic interaction?
A social interaction in which individuals are aware of the outcomes/effects their actions will have on themselves and others.
What is strategy?
Action(s) that people can take when engaging in a social interaction
What is a game?
A model of social interaction that describes the players, the feasible strategies, the information the players have and their payoffs.
What is game theory?
A set of models of strategic interactions
What are the conditions of game theory?
- individuals make decisions simultaneously
- individuals make decisions independently
- the individuals only interact once
What is the ‘best response’? What is a ‘dominant strategy’?
BR - The strategy that will give a player the highest payoff, given the strategies that the others select.
DS - The strategy that will give a player the highest payoff, no matter what the other players do
What is a ‘dominant strategy equilibrium’?
An outcome of the game where both players play their dominant strategy.
NOTE: no individual would want to deviate from the dominant strategy equilibrium under regular circumstances
How is decision making in a game different to individual decision making?
In individual decision making the payoffs do not depend on what others do but in a game they do.
In both situations, the decision making itself is NOT dependent on anyone else.
What is the difference between the ‘invisible hand’ outcome and the ‘prisoners dilemma’ outcome?
In the ‘invisible hand’ outcome, when both players select the dominant strategy, this leads to the outcome that yields the highest payoff for all.
Whereas in the ‘prisoners dilemma’, when both players play their dominant strategy, the resulting outcome for both of them is worse than if they had both adopted a different strategy (less than optimal).
What is ‘free riding’?
When individuals benefit from a group contribution task without contributing to it.
What is a public good?
A good that, when used by a person, does not reduce its availability to others.
What is a Nash equilibrium?
A set of strategies, one for each player in the game, such that each player’s strategy is a best response to the strategies chosen by everyone else. (ie the payoffs for both individuals is the same).
