Prisoners Dilemma

The “prisoners dilemma” helps us to understand the complex negotiations that occur on the international level when relating to the global environmental problems. The prisoner’s dilemma is a parable that helps to illustrate the fundamental problems of individuals placing their own selfish interests ahead of those of the larger group.

The original expression “tragedy of the commons” was made famous by a biology professor Dr. Garrett Harden in the 1960’s. He wrote a parable where fictional sheep farmers shared a common land. The individual sheep farmers each were motivated to add one more sheep to the land because each sheep they added created an additional benefit to them (but not to other farmers). The problem was that with each additional sheep, the value of the land for everybody went down. But from a personal perspective, that devaluing of the land was not attributed just to the one farmer. Instead, the amount of devaluation of the land was shared equally among all of the farmers. This meant that the individual would gain a lot personally, but suffer only a little personally because of his actions. Each individual sheep farmer, if he follows his own self interest, will continuously add more and more sheep until the land is worthless for everyone.

Imagine a hypothetical situation where two people are arrested and interrogated separately. There are three possible outcomes to this case. If they both were to cooperate, then they will both walk away with only a mild punishment. But, there is the incentive to deceive and cheat. If one of them were to cooperate, but the other one broke ranks and implicated the other, he would capture all of the benefits, and the other honest one would suffer all of the punishment. The final scenario is that both people would act in their self interest, and then both of them would suffer the punishment.

The dilemma centers on the issue of trust in a group dynamic. If you can get everyone to go along with the plan, then no one will lose big. But the personal incentive is that if you can be the one to move first, and if the other person were to stay put (and do nothing), then you would get away relatively unharmed, and the other person would suffer all of the dire consequences.

We use the prisoners dilemma to help understand the dynamics of dealing with Environment issues.

The environment is something that we all have to share; it’s a “communal good”. We all have to share the air that we breathe, the oceans that hold the fish and the land and trees that make oxygen for us all to breathe. But because each of us are not given ownership over the air we breathe, nor over the oceans or forests, we don’t feel personally responsible to protect these elements.

The main problem here is a lack of personal or private ownership. There is a saying in economics that if something is owned by everyone (as is the environment), than it is owned by no one. If every one owns something, then no one in particular is personally responsible for it. If someone is not given a personal stake in maintaining or improving something, and if they don’t have a stake in the outcome, then they will have very little incentive to look after it.

This parable (above) has been used frequently in explaining the causes of global environmental problems. The suggestion is that individuals (and individual countries) may not take into consideration the negative global effects of their actions because the cost of those actions will be spread among all of the people (and countries) of the world, but the immediate benefits will go directly to the individual. For example, it may be more personally rewarding to drive your own car than to take a shared ride, but the additional environmental cost to the air quality is not assigned to each individual that makes that choice. Because the individual just gets the individual reward, but the costs are shared by everyone, there is the personal incentive for each of us to choose to have our own car. The personal benefit of adding an additional automobile is greater than the personal detriment of the global warming due to the extra CO2.

One way to overcome this “tragedy of the commons” is to come up with some method of assigning an economical cost to the individual for his or her actions, such as levying additional taxes on gasoline consumption. Alternatively, a government may regulate the technology of the automobile itself, thereby adding cost to the car producers. One way or another, it usually can only be solved by a government power that is higher than the individual, because as the parable illustrates, it is not in the individuals self interest to correct this problem. If the society as a whole decides that the environment is an asset that needs to be protected, then it’s argued that the state should play a role in saving us from the “tragedy of the commons”.

If environmental problems were confined to just one state, then the issues would not be as complicated from an IPE perspective. But because many of the environmental problems today are global in their nature (deforestation,  global warming, etc), there is a need for some sort of international power to force individual nation states to consider the “greater good”, and not just their self interest. Countries, like individuals, will have the incentive to act in their self interest as long as the majority of the costs associated with those actions will be borne by others.

For example, a country like Brazil might have it in their best interest to chop down most of the Amazon forest (which covers 50% of their country) and make way for more agricultural plantations of valuable soy, coffee or sugar. But it is in the world’s best interest to keep that essential rainforest intact because it is instrumental in providing the world with oxygen to breath. The benefit of chopping down the trees would be given exclusively to Brazil, but the cost of poorer air quality would be shared by all countries in the world. On an individual level, if you ask most Brazilians, they will tell you that it is unfair that the world asks them to keep the forest intact, but is unwilling to offer them financial compensation for doing so. Many other countries, however, find it distasteful to pay Brazilians to not chop down their forests. This issue is a long way from being solved, but the parable of the “tragedy of the commons” at least helps us to better understand what is going on.

On the international level, environmental problems become difficult to address because there is not a global-cop out there that can force sovereign nations to do what they don’t want to do.

For example, if China were to want to build 1000’s of coal burning electrical generators, there isn’t a whole lot that the Europeans could do to stop them. They might argue with the Chinese that coal burning is extremely bad for all of the pollution that it causes, but the Chinese would be well within their rights to go ahead with their coal plans anyways (and they are). It might well be in the worlds best interest to limit the amount of coal that is burned, or at least invest in expensive clean-coal factories and expensive pollution-reduction technologies, but the Chinese may not want to spend the money to invest in technologies such as these. The incentive for them as a country is to produce as much electricity as cheaply as possible to feed the growing demands from their enormous population. The cost of global warming is minimal to the economic demands of their immediate energy-hungry population. They might well see that it is every countries best interest in the long term to limit the amount of CO2 that enters the atmosphere, but they would be happy if other countries would take action, and leave them alone to develop their economy as they see fit. This is where the “prisoner’s dilemma” comes into the picture.

The “prisoners dilemma” helps us to understand the complex negotiations that occur on the international level when relating to the global environmental problems. The prisoner’s dilemma is a parable that helps to illustrate the fundamental problems of individuals placing their own selfish interests ahead of those of the larger group.

Root of the problem

When discussing the global environmental problems such as ozone depletion, there is a clear advantage if you can be the only country using the cheaper (but more harmful) technology. If you can get all of the other countries in the world to use the more expensive technology and if you were the only one polluting, then your small amount of pollution would not be enough to cause any major environmental harm. But, if everyone were to use the cheaper and more polluting technology, then the damage would be substantial and everybody would suffer. Therefore, there is the incentive to try and get everyone else to be good, but for the individual to try and cheat the system.

This same reasoning can be seen in environmental concerns around the world. If my company were the only one chopping down the rainforest, then it wouldn’t be a problem, but if every company did so, then it would be gone in a heartbeat. If my company were the only one polluting a river, then it wouldn’t matter, but if all of the companies polluted the river, then it would be. The same parable has applications from global warming to deforestation to depleting of the world’s fish supplies. In each of these cases, it is clear to see how there needs to be uniform agreement on the issues if any progress is going to be made.

This helps to explain why global environmental problems are so much more difficult to address because each individual nation’s government is primarily responsible to its citizens. With national priorities of economic development, it is often in the countries interest to defect. For this reason, many people look to international organizations and NGOs to help defend global environmental assets.