Karl Sigmund’s games are serious and sometimes dark, investigating whether revenge-based retaliation against defectors, exploiters, and free riders by peers in a group is superior to retribution delivered by impersonal institutions. The games also have a more positive aspect, offering rewards for trusting and cooperating with the other players. With the right mixture of positive and negative incentives, players are encouraged to seek success through cooperation instead of trying to get ahead through exploitation and free riding.
Sigmund began using these “public goods games” early in his career to study the first instances of cooperation in human societies, including those of hunter–gatherers who lived tens of thousands of years ago, before institutions and laws existed to dictate behavior.
The lessons learned from years of behavioral games research have led Sigmund to his current work, which examines how to regulate the selfish actions of individuals that jeopardize common goods, such as clean air, civil security, fish and game stocks, or even the global climate. In a limited world, Sigmund says that “open-access resources that are utilized unrestrictedly tend to suffer from overexploitation [and] will often collapse through an inevitable Tragedy of the Commons.”
One goal of the current project, being conducted in IIASA’s Evolution and Ecology Program, is to explore how top-down regulations can be improved by integrative assessment of the conflicts of stakeholders and by scaling up the successful characteristics of self-organized bottom-up governance.
Sigmund explains that regulations to prevent the abuse of resources can emerge bottom-up, through agreements among stakeholders, or be imposed top-down, through the involvement of governing agencies. Bottom-up regulations are “often not only remarkably efficient,” the project synopsis says, but “tend to be perceived by the involved stakeholders as equitable and fair.”
Top-down regulations, in contrast, have been marred by a history of fiascoes. Regulations can fail for a host of reasons, the synopsis notes, including “when they are based on insufficient analyses of underlying systems dynamics, when stakeholder interests are misconstrued, when side effects and loopholes of seemingly appropriate incentives are overlooked, when they disagree with established social norms, and when governance structures are inadequate.”
“I’m familiar with the bottom-up, and now I want to check if those characteristics apply to negotiations between institutions or between nations,” Sigmund says. “All of the complex climate treaties are examples of the public goods game where the players are nations instead of individuals. They start with a very complex procedure of first signing a treaty, but the treaty has to be ratified in every country, and only when it is ratified can it be implemented.”
Treaties typically contain incentives and penalties for the signatories, but none of these can be implemented until the ratification process is concluded. Reaching an agreement, then implementing a system of rewards and punishments, is a “principle that works very well when small groups of individuals are collaborating,” Sigmund says, “but it seems quite difficult to do this with nation states, particularly when large numbers of nation states are trying to work together.”
One of the lessons of small-group behavior, he says, is that “punishing others is a costly thing, so there is the temptation to let others, such as neighbors, punish the exploiters in the group. If I can just free ride on someone else doing the punishment, then cooperation could be maintained without any cost to me.”
The issue of free riding quickly becomes complicated because a free rider is an exploiter who is not contributing to the group. If free riding is allowed, the group can collapse, so free riders should be punished to boost the interests of the group. But a group member who stands back while someone else bears the risk and cost of punishing an exploiter is, by definition, a free rider deserving of punishment.“
There is a strong incentive to free ride on the propensity of others to punish those who free ride,” Sigmund says. “This is called second-order free riding.”
On the larger scale of his current research, Sigmund is seeing the free-riding pattern in interactions between nations. “The most glaring example is the euro,” he says, “which seems to be a good idea in principle, but there is the possibility of exploiting the efforts of others, so some nations can free-ride on the contributions of other nations.”
According to Sigmund, some states will eventually have to reach the point of punishing others, according to patterns observed in small-group games. “You don’t want war, but how to coerce nations by other means is an extremely fascinating problem,” he says.
Sigmund notes that he studies these interactions from a “biology and evolution of the human species” aspect, while economists and legal professionals approach them from an inter-state negotiations point of view. “I hope we are converging on some joint results,” he says.
In a complex arena in which players, be they individuals or states, can be characterized by their propensities instead of predictably rational behaviors, a new phenomenon has been discovered in the past two years that adds another layer of intrigue to the public goods game.
“In recent experiments it’s been found that in some cultures you find punishments that, themselves, are anti-social, meaning that the good guys are getting punished,” Sigmund says. “It seems very strange and was discovered only recently because the first experiments on punishment in public good games were done 10 to 15 years ago in Switzerland and the East Coast of the United States, and in those places you don’t find a propensity for anti-social punishing.”
But when the same experiments were conducted in some regions of Russia and Eastern Europe, he says, researchers found a significant amount of punishment aimed at the “good guys.”
“There is a connection between how individuals behave in small groups in these experiments and how strong the rule of law is in the state where the individual is living,” he says. “The United Nations has an index yearly measuring the rule of law in every country, and it is in countries where that index is low that you find the anti-social behavior in game playing.”
The reasons why the good guys get punished isn’t clear, but Sigmund suspects it is tied to some basic, and dark, human behavior. “It may have to do with the idea that, ‘they had it coming,’” he says. “One hates to have someone who is so much better than you in a group, so maybe the anti-social punishers anticipate that eventually they will be punished by the good guys for exploiting the group, so they begin by punishing the good guy.”
The anti-social behavior is evident in small groups, but those small groups are embedded in a larger culture, and the negative behavior seems to be culture-specific. In a public goods game, Sigmund says, people who contribute and cooperate eventually earn money and come out ahead. In cultures with the anti-social behavior, some don’t engage in such mutually beneficial behavior and will instead start punishing the good guys and retaliating to such a degree that the whole game is destroyed.
“It is fascinating how this microeconomics game reflects on macroeconomics,” he says. “You can do this simple experiment involving a handful of players and say something about the state of the national economy for that country.”
What Sigmund says he hopes for with his work are insights that enable communities to pursue solutions that fit their specific situations.
Last edited: 27 August 2012
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