Is punishment necessary to secure public goods?

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Submitted by adam ricketson on Tue, 2009-09-15 20:41.

One of the most common arguments for the state is that some authority figure needs to mete out punishments to those who do not contribute to public goods, most generally by mandating tax payments. While most people take this as an obvious fact (probably due to a desire to justify the status quo), these arguments are little more than naive speculation.

Given that cooperation does exist, many researchers are interested in understanding how it can be evolutionarily stable (i.e. how can cooperators outperform cheaters). One classic way to examine this is by modeling the prisoner's dilemma -- where players have the choice to cooperate or defect, and cooperating increases the total benefit to the group but defecting increases the individual's benefit.

Modeling definitely has its limits, but it is far superior to traditional (verbal) philosophy. Both modeling and verbal arguments are limited by the factors that the thinker is willing to consider. However, modeling has the benefit of being explicit about the assumptions being made, and the quantitative nature of modeling allows multiple factors to be considered and their interactions examined. But in the end, it is still just a model.

Modeling has revealed several "solutions" to the prisoner's dilemma (i.e. situations that result in cooperation). High on this list is the introduction of reputation mechanisms -- which lead to an optimal strategy called "tit for tat with the benefit of the doubt". I've also heard that giving players a "loner" option (in addition to cooperation or freeloading) can facilitate cooperation, as can allowing cooperators to avoid freeloaders.

Over the past few years, many studies have examined the consequences of allowing the actors/players to punish those who fail to contribute to the common good. These studies indicated that people would punish others even if they suffered a cost, and that this still managed to increase the overall benefit to group members. I call this the "spite is noble" argument, which makes my stomach turn. However, I also had intellectual problems with these models-- they are overly simplistic in how they forced the victim of punishment to just take it, rather that giving him the opportunity to retaliate (I think they also prohibited the players from abusing their ability to punish).

Finally, we're seeing some more pushback from researchers who realized that the pro-punishment studies were essentially gamed to produce a certain outcome (frankly, most models are designed to produce certain outcomes, which is one of the limits that they share with traditional philosophical arguments).

Anyway, here is the abstract (i.e. summary) from a recent article from Science (sorry, it's behind a firewall, but you can find related articles at PubMed, some of which are marked as "free") :

Positive interactions promote public cooperation.

The public goods game is the classic laboratory paradigm for studying collective action problems. Each participant chooses how much to contribute to a common pool that returns benefits to all participants equally. The ideal outcome occurs if everybody contributes the maximum amount, but the self-interested strategy is not to contribute anything. Most previous studies have found punishment to be more effective than reward for maintaining cooperation in public goods games. The typical design of these studies, however, represses future consequences for today's actions. In an experimental setting, we compare public goods games followed by punishment, reward, or both in the setting of truly repeated games, in which player identities persist from round to round. We show that reward is as effective as punishment for maintaining public cooperation and leads to higher total earnings. Moreover, when both options are available, reward leads to increased contributions and payoff, whereas punishment has no effect on contributions and leads to lower payoff. We conclude that reward outperforms punishment in repeated public goods games and that human cooperation in such repeated settings is best supported by positive interactions with others.

 This obviously is not the last word in this debate, but it is sufficient to demonstrate that the pro-coercion crowd doesn't have an airtight argument, so we might wonder if we want to spend billions of dollars and throw people in jail based on the "spite is noble" theory of society.

I'd like to see a more extensive analysis of these dynamics from a utilitarian perspective (I've sketched out a few models myself, but don't know when I'll get around to preparing them for presentation). One complication that I've never seen is what happens when the right to punish is delegated to a select individual (i.e. the state). Also, how do these dynamics play out when there is more diversity in society, in terms of how much each actor values the welfare of others (with group structures), and how much agreement there is on whether the "public good" is actually good.

Related articles:

Kaligula on why government does not optimize provision of public goods, and whether the state is necessary for cooperative defense.

I also came across another article called The dynamics of deterrence, which examines the conditions under which punishment is an effective deterrence.

 

adam ricketson's blog »

Price of Monopoly

#7534 On Wed, 2009 09 16 05:47 ka1igu1a said,

I haven't read my evolutionary game post in a while, but a better term for the "Price of Statism" would be the "Price of Monopoly."

In conditions of monopoly production of "public goods," if marginal cost exceeds marginal value for an extra unit of good produced, then the monopoly firm(the State) most certainly will have to rely on "punishment mechanisms" to sustain the current demand curve.

Why the State(even a "democratic" one) generally cannot solve the "public goods" problem:

1) Voting itself is a public goods problem(Rational Ignorance): That is, voting for the candidate that would best serve the general interest is a "private good" that takes a lot of time and energy, with most of the benefit of such an expenditure going to other people.

2) Rational Irrationality(self-interested voting): That is,voting for your own self-interests, or voting for your own preferences, even if irrational, disperses the costs of over a large population. In short, you don't have to bear the full costs of your stupidity.

3) Legislative Capture: That is, politicians mainly serve special interests, the predictable culmination of both (1) and (2).

(1),(2),(3) formulate the basis of what I call the "Redistribution Problem," meaning that government primarily serves the function of redistributing resources and other peoples' money, not in solving collective action problems per se. This is why being a politician is a full-time job, and why they don't meet for only, say, 1 month out the year.

In Network theory, "the price of anarchy" refers to the possible loss of efficiency as the result of lack of sufficient coordination. The "problem" with anarchy is the "coordination problem," not the "public goods problem." If coordination problems are sufficiently resolved, then so-called "public goods" will largely take care of themselves. Collective Action problems, in reality, are about solving coordination problems, and not about engineering some moral notions of "social justice." While the State is one solution to the coordination problem, it's larger role invariably serves to perpetuate the "Redistribution Problem," a consequence of monopoly.

Theoretically, A "Georgist State" solves the coordination problem without too much of the baggage of the Redistribution problem, but it's not clear to me that Georgism is evolutionary stable under conditions of a monopoly.

Left-Wing Hayekianism
My term for "survival of the fittest of social institutions," recognizing that humans are fundamentally egoist, but, yet, 99.9% genetically identical. Social Darwinism typically gets conflated with "survival of the strong over the weak," typically referring to individuals. No, eugenics is the past legacy of the progressives, not the libertarians. But the question is, why shouldn't social institutions be subjected to competition to filter out the most fit from the least fit? My feeling is that the most evolutionary fit institutions, given that humans have an aversion to being "enslaved," would end up being based on "rewards" and not "punishment" to reinforce cooperation. As we all know, trade, both in ideas, culture, and goods, reinforces cooperation. So, in a sense, i'm treading along the grounds of say a Patri Friedman.

I don't consider this Utopian in the least(and i'm particularly cognizant of not being guilty of such). Following Hayek, the market generally is a spontaneous order, not an ends-related, self-conscious organization(thus belying, for example, the Rothbardian agorists). However, Hayekian coordination must operate within an overriding coordinated framework of some sorts. Hayek was a classical liberal, and thus his framework was a "constitution." However, (radical)libertarianism has more or less dispensed with the State as a coordinating mechanism, for reasons of, say, the Redistribution Problem. And this coordinating framework cannot be praxeologically deduced. Rather, it's something that likely itself, has to arise as an emergent order, without necessarily being unique. More Hayek than Hayek...

My guess is that such evolutionary stable emergent orders, based on network and graph theory, would likely have to incorporate a strong sense of a commons, if you want evolutionary stable coordination that won't devolve into another monopoly.

As I've posted many times before, I don't think the National Security State is evolutionary stable over the long haul because public choice, the Redistribution problem is driving it to mediate and collectivize every transaction over the increasingly small network. The more evasion it engenders, the more it loses legitimacy...

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Left-Wing Hayekianism

#7537 On Wed, 2009 09 16 11:05 FreedomDemocrats said,

In talking about social institutions I think it's difficult to determine what is evolutionary stable over the long haul because we are looking at such a small slice of our history when focusing just on the last 10,000 years or so. But I do think we can see a lot of examples of what has worked and hasn't worked, at least in the short term.

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Small is Beautiful

#7536 On Wed, 2009 09 16 11:03 FreedomDemocrats said,

I think the one lesson that comes out of the studies involving cooperation and the prisoner's dilemma is that smaller groups where people continue to repeat their interactions lead to more cooperative outcomes. This is arguably supported by real world examples from more egalitarian hunter-gatherer societies. The higher densities brought about by sedentary culture and the larger surpluses available to fight over and appropriate seem to lead to a breakdown in more cooperative outcomes.

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Small Network is Beautiful...

#7548 On Sat, 2009 09 19 07:01 ka1igu1a said,

Small Network emphasizes the "smallness" in terms of degrees of separation("six degrees of separation") we are from each other, which is a better meme today, than resorting to the hunter-gather "small is beautiful" meme of detached tribal communities...

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