Friday, March 28, 2008

Real-life examples

John Morales asks for some real-life examples of game theory in ethics.

In many instances where game theory intersects real life, we just play the game according to the (local) Nash equilibrium. The phrase "All's fair in love and war" says that one is free to pursue the strategy that will bring the greatest immediate individual benefit. We construct specifically ethical systems when for one reason or another, we have to go "outside" the game to achieve what we intuitively feel is the best overall outcome.

For example, I can go into a restaurant, eat a meal, and then be presented with the bill. This is an example of a related game, the asymmetric closed bag exchange. Regardless of whether or not I'm actually served a good meal, I am always "better off" not paying (I get to eat the meal and keep my money). Paying before I eat (like at McDonalds) just changes the asymmetry; whether or not I pay, it's always "better" for the restaurant to not feed me (defect) once I've paid (cooperated).

The Pareto optimum (and usually the global maximum), though, is for the restaurant to serve me a good meal and for me to pay.

In a small community, we can play tit-for-tat. If I don't pay on Monday (he cooperates, I defect), the restaurant won't serve me again until I pay without eating (he "defects", I cooperate). However, a rational person with foresight will simply see the outcome of the repeated iterations. We call this foresight the ethical evaluation that you should pay for your meal.

In a larger community, where there are more non-communicating restaurants than I can eat meals, tit-for-tat doesn't work; I can play as many one-shot games as I like without fear of reprisal. So we make laws which follow from our idealized tit-for-tat strategy (i.e. good laws follow from good ethics).

But we can observe that the law is relatively easy to circumvent: There isn't a police officer standing at the door to every restaurant. Instead, we cultivate in ourselves ethical habits. In this case, the the thinking is one level more abstract: If too many people in general were to eat without paying, no one (myself included) could eat at restaurants, so we police ourselves.

There are other examples. I can work hard (cooperate) or slack off and just look busy (defect); my company can give me a raise next year (cooperate) or stiff me (defect). As an exercise, use game theory to relate the Communist slogan, "From each according to his ability, to each according to his need," with the cynical Soviet observation, "we pretend to work, and they pretend to pay us."

A lot of human behavior can be modeled just by reducing it to pure game theory and locally rational choice. But as the Prisoner's Dilemma shows, some situations are not so easy to reduce, even in theory. It is precisely those Prisoner's Dilemma and similar games which cause us to go outside the game and create ethics and laws.


  1. Mr. Bum.

    I am well aware that a lot of people think that game theory has interesting implications for ethics. However, this merely represents an instance of a bandwagon fallacy. The question is whether they have good reason to do so.

    They do not.

    As I mentioned in my previous post, PD situations are highly contrived and ignore many real-world facts that are morally relevant, such as variable pay-offs, the possibility of anonymous defection, the possibility of deception, and the possibility of affecting desires.

    I can handle the restaurant scenario above far easier without involving game theory. What happens if we raise our children so that they simply acquire a desire for cooperation or an aversion to defection?

    If we look at your original account from Wednesday's post, and raise children so they assign 2 units of value to cooperation itself, then the value of cooperation increases from 3.3 to 5.3,and exceeds the value of defection. We solve the same problem without any of the complexities of game theory.

    You say that your restaurant visitor is 'better off' not paying for his meal. However, that depends on what he values. Give the restaurant person an aversion to defecting on a trade. Just as he might, for example, pay $100 to avoid a certain amount of pain, he is also willing to pay $1000 to avoid the psychological discomfort of theft. Now, he has a reason to pay - again, without bringing in any of the complexities of game theory.

    If you approach the problems that game theory is supposed to handle in this way, you not only avoid the problems of game theory, but it avoids the problems of game theory. There is no problem with anonymous defection, because the agent gains nothing by defecting. There is no problem with varying payoffs, again, because (with a sufficiently strong moral motivation), cooperation will always have more value than defection. By instilling a sufficiently strong aversion to deception, we can avoid the problems that the possibility of deception has for game theory options.

    Game theory is an interesting numbers game, and it even has real-world application in some extreme and highly unusual circumstances (where payoffs get extremely large). However, it is not a part of day-to-day morality.

  2. Thank you.

    A good example showing how choices can be considered game-theoretically - if the goal of the game is to maximise overall benefit to the player.

    But surely the goal of the game should be to maximise the ethical outcome, for which an existing ethical framework seems necessary.

    I still don't see how you could apply game theory to ethical decisions in general (unless you're an Objectivist :) rather than cost-benefit.

    Some ethical choices are not about self-benefit - for example, at what level of payoff would you risk your life for another's? Game-theoretically, I would suggest you wouldn't do it for no payoff.

    I note decision theory encompasses game theory.

  3. However, this merely represents an instance of a bandwagon fallacy. The question is whether they have good reason to do so.

    They do not.

    The snotty arrogance does not suit you. Don't move the goalposts like a theist.

    And you and I have been talking for years (I was SingleDad at IIDB). You can call me Larry.

  4. John: if the goal of the game is to maximise overall benefit to the player.

    Game theory takes the notion of "overall benefit" as an input, as a parameter. Game theory assumes you can quantify benefit (or at least create a less-than ordering of benefits) before you start the analysis.

    It doesn't matter what you call this "benefit".

    One of the ways I suspect Alonzo and I fundamentally differ is that I consider ethics to be the study of how to maximize getting what we already want, whereas Alonzo seems (as best I can understand) to view ethics as how to determine what we should want. I don't think the latter view is tenable, because there's no neutral perspective from which we can consider desires.

  5. barefoot bum

    You know, I was worried about whether my comment might end up conveying an unintended attitude. When I wrote it, it sounded in my brain like light-hearted banter.

    I guess my brain must be out of tune today.

    Any snooty arrogance was unintended. You are, and for a long time have been, one of my favorite writers.

  6. Perhaps I over-reacted.

    Bygones, ok?

  7. Game theory assumes you can quantify benefit (or at least create a less-than ordering of benefits) before you start the analysis.

    How do you quantify ethical merit, and make relative comparisons? Do you build absolutes into your model? (Is theft always wrong? Do the means justify the end?)
    The difficulties in achieving such codification seem endless.

    I define ethics as the set of axioms and rules on which you make choices about what is right and wrong. This is essentially prescriptive, so yes, when faced with a moral choice, I ought to do as my ethical system dictates.
    I ought to behave so as to avoid future ethical problems.

    I won't go as far as Alonzo, but I don't think you've supported that games theory can be generally applied to ethics.

    I think your case would better be made for decision theory; it would certainly apply to many more situations.

  8. I just want to clarify that I too don't mean to seem wholly critical.

    I find you an interesting writer but don't tend to post purely approbative comments. I think the blogosphere would be the poorer for your absence.

    Impartially, I hazard to opine that Alonzo had no need to point out other strategies could solve your example; it is not in dispute that game theory addresses it and that was what was requested.
    I guess he did so to emphasise his evaluation that, at best, this approach is of limited utility.

  9. Alonzo: Could clarify a point for me? I'm not sure if you're maintaining that Game Theory to be too complicated or too simple.

    John: The idea that some strategies — any strategies — do indeed solve problems would seem to entail some form of game theory.

    As a philosopher, I'm looking for essential examples that are paradigmatic examples of how to interpret an analytical schema. I certainly do not think that one must shoehorn every ethical issue into a perfect Prisoner's Dilemma game.

    PD is interesting because of its interpretive characteristics, specifically that what we naively think a self-interested person would choose leads to what we naively believe to be the worst outcome, not the best.

    Any time our naive concepts seem so confused, I think we're looking at some area where logical analysis can give us something really new.


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