Using game theory to understand cooperation

Overfishing, greenhouse gas emissions, and air and water pollution: These are all examples of “tragedies of the commons,” when individuals—acting according to their own self-interest—behave contrary to the best interests of the wider group by depleting or degrading a common resource. To determine how to avoid such tragedies, researchers from the IIASA Advanced Systems Analysis Program have been using a game-theoretic approach.

One of the major questions related to sustainability is how to convince people to modify their behavior in ways that reduce their consumption. A new IIASA study provides a unique new modeling framework, which translates findings from psychological research into a formula that can be applied to social and environmental perceptions and consumer behavior. The aim of this study was to see how much individual action can drive sustainable solutions, and how individuals influence each other.

The results showed that, at least in the theoretical framework, consumers’ individual actions could go a long way towards optimizing the use of the shared resource. In particular, when individuals attached more relevance to information about the actions of others as compared to information about the state of the resource, they were more likely to modify their actions to reduce their own consumption.

Identifying ways to encourage individuals to cooperate remains a challenge. To tackle this, IIASA researchers developed a technique that allowed, for the first time, theoretical games to be decomposed into the portion that encourages individuals to seek personally preferred payoffs and the portion that requires cooperation among players [2].

An important form of cooperation is when society invests in protection against what are known as “contagious random attacks,” such as an outbreak of a disease, a computer virus, or terrorism. Protection might therefore include vaccination programs or airport security. A recent IIASA study, using the mean-field approximation approach, shows that these different applications lead to very different equilibrium patterns of investments in protection, with important welfare and risk implications. For example, vaccination programs have a unique equilibrium in which more connected individuals are more likely to get vaccinated. However, airport security or certain types of computer security investments can lead to multiple equilibria and coordination failures [3].