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Collective Blindness to Collective Action

By 25 October 2010 2 Comments

A political piece last week in AEI’s American addressed the recent controversy over political endorsements by the VFW – PAC.

The article had a broader point relevant to the ambit of Digital Society, which is that many current problems in public policy involve issues of the type known as collective action problems (or prisoner’s dilemma, or constitutional versus particular interest – there are nuances of difference, but all are in the same ballpark). This most definitely includes issues of the internet, telecommunications, intellectual property.

Collective action problems are ubiquitous in human societies. They involve situations in which everyone is better off if everyone cooperates on some general rules of the game, but each individual is better off if everyone else cooperates while he/she defects and free rides. Since everyone knows the incentives that are working on everyone else, unless there are some agreements and enforcement mechanisms, everyone will try to defect and the collective will be much the poorer. So the question facing all societies is how to solve these problems and promote cooperative behavior.

As William Poundstone wrote in Prisoner’s Dilemma, “It is one of the great ideas of the twentieth century, simple enough for anyone to grasp and of fundamental importance.” (p.9) He also said:

The prisoner’s dilemma is a universal concept. Theorists now realize that prisoner’s dilemmas occur in biology, psychology, sociology, economics, and law. The prisoner’s dilemma is apt to turn up anywhere a conflict of interests exists – and the conflict need not be between sentient beings. Study of the prisoner’s dilemma has great power for explaining why animal and human societies are organized as they are.

These concepts have not lacked for explication. Thomas Schelling and Robert Aumann won a Nobel in 2005 for their work on collective action. There have been hundreds if not thousands of learned articles. College undergraduates imbibe the lessons of prisoner’s dilemma in their first year poli sci courses.

Yet – one NEVER hears in DC discussion of policy issues, “this is a prisoner’s dilemma problem,” nor “gentlemen, we face an elementary issue of collective action,” nor “there is a conflict here between my constitutional interest and my particular interest.”  For example, Philip Howard recently attributed the domination of politics by special interests to a loss of honor. I beg to differ; any special interest caught in a situation in which the polity is failing to establish the conditions for making and keeping bargains that solve prisoner’s dilemma problems acts foolishly if it fails to grab for its share. The problem is not one of dishonor for being realistic; it is collective stupidity for not recognizing and solving the problem. And you cannot do that if you refuse to name it.

If there were any place where one would think the concepts would have central role, it would be constitutional litigation. After all, the very purpose of a constitution is to solve collective action problems. Each individual might like to see his religion established and others suppressed, but, recognizing the social chaos caused by such conflicts, we agree on a First Amendment and then defend that bargain against those who try to undermine it. (Similar principles apply to economic liberties, though that bargain was destroyed in the 1930s.)

Yet nowhere in Supreme Court jurisprudence does one find any reference to collective action problems as a possible organizing principle – or at least this was true five years ago when my then-colleague Solveig Singleton and I argued it in an amicus brief in the Grokster case. (See below.)

I have no explanation for this collective blindness to the importance of the concept of collective action. But I am quite certain that political and legal discussion would benefit from their inclusion.

By way of example, here is the relevant extract from our Grokster amicus:

Consumers know perfectly well that unauthorized downloading decreases incentives for creativity, but they have a collective action problem, of the type known as Prisoner’s Dilemma.8  They know that their collective course of conduct is ruinous in the long term, to the creation of product and to the development of legitimate Internet distribution channels, but no single consumer can stop the tide.9 An individual who stops participating loses access to the material while other consumers continue to obtain it. In the end, the individual’s refusal to participate will have trivial impact on the availability of content in the future, so the non-participant will have sacrificed without result. Thus, while each participant knows that the current course of joint conduct is folly, each has a strong incentive to continue to take while the taking is good.

Indeed, the situation becomes a particularly egregious case of a commons problem. If a commons is going to be destroyed, then each individual has an accentuated incentive to grab as much as he or she can as quickly as possible before the destruction is complete, and the downward spiral accelerates.

Clearly, consumers’ willingness as individuals to seize the opportunity offered by Grokster to loot the music commons is not an indication of what they would perceive as their real long-term interest. Consumers’true interest is in finding a mechanism for solving the Prisoner’s Dilemma problem, a mechanism by which each consumer agrees to forego un authorized downloading in exchange for a similar commitment from others.

In this framework, the question becomes, “what legal rules will prevent business entities from exploiting the short-term incentives of the situation and will enable consumers to pursue their long-term collective interest?”

FOOTNOTES:

8 For readable discussions of this concept, see William Poundstone, Prisoners Dilemma (1992), Robert Axelrod, The Evolution of Cooperation (1984), and James D. Miller, Game Theory at Work (2003). There is a minor dispute over nomenclature, since some purists think the name “Prisoner’s Dilemma”should be applied quite narrowly. This brief follows Poundstone, Axelrod, and Miller in using the term more generally, as a shorthand for the large class of situations in which short-term incentives of each individual render it difficult for the individuals en masse to maximize their utility. As Axelrod says:

Prisoner’s Dilemma [is used] as the conceptual foundation for models of important social processes. Richardson’s model of the arms race is based on an interaction which is essentially a Prisoner’s Dilemma . . . . . Oligopolistic competition can also be modeled as a Prisoner’s Dilemma . . . . The ubiquitous problems of collective action to produce a public good are analyzable as Prisoner’s Dilemmas with many players . . . . Even vote trading has been modeled as a Prisoner’s Dilemma . . . . In fact, many of the best-developed models of important political, social, and economic processes have Prisoner’s Dilemma as their foundation. (References omitted.) Axelrod, supra, at 28.

The distinction can also be embodied in the terms “constitutional interest” and “action interest”; the constitutional interest is what the individual sees as being in the best interest in the group as a whole while action interest is his interest in a particular situation. See Viktor Vanberg & James M. Buchanan, “Rational Choice and Moral Order,”in 10 Analyse & Kritik 138 (1988).

9 A lively empirical debate exists over the impact of the unauthorized downloading services on sales of CDs. This literature is not cited here because it is profoundly uninteresting. While dual distribution channels will exist for some time, and the interaction of P2P with the sale of physical CDs will be complex and sometimes beneficial, the future of the business is in changing music into bits and sending it out over wires and wireless. The crucial issue in this case is the impact of Grokster and similar companies on the development of legitimate channels in this space, not on its impact on a declining business model.

2 Comments »

  • Digital Society » Blog Archive » Congratulations! It’s a BITAG! said:

    […] value of this function is that it provides a mechanism for the industry to address its problems of collective action. The Internet has many players performing many different functions. Their relationships are partly […]

  • Digital Society » Blog Archive » Innovation & Regulation said:

    […] based on real and complex ideas, not the mummified remains of 1960s Program Budgeting — some Collective Action and Prisoner’s Dilemma; a little Public Choice; something about OODA Loops; perhaps The Machine that Changed the World, […]