LECTURE 1
What is interdependence?
● People are interdependent when their actions influence not just their own welfare, but
also the welfare of others
● Interdependence: situations where people’s actions influence own welfare and
welfare of others
● Control over own and others outcomes
● Consequences for others → own actions and decisions affect others
● Consequences of others → others actions and decisions affect us
○ Working in a team, group project – if everyone puts effort it makes the job
easier for everyone, if someone doesn’t put effort it makes it harder for
everyone
○ In relationships – each partners behavior influences the other and vice versa
● Outcome is not only monetary, also → health, happiness, quality of life, grade
● Interdependence occurs almost always in social situations
● Very low or no interdependence in individual settings
○ when reading a book, low interdependence
Analysis of a Situation
1. Who does the dishes in a household, how it affects the welfare of each other
2. Situations where people have to cooperate to achieve a greater goal
3. Penalty kick, how people guess the correct kick
4. In risky situations, how people choose risk or compromise
1. Who is doing the dishes?
Welfare of roomates
● Two people choose to wash or not wash dishes
● Welfare represented as thumbs up or down
● If they do dishes together → cooperate, share load → moderately happy
○ one big thumbs up
● If one does it and the second doesn’t → first not happy did everything, second very
happy got results without doing anything
○ double thumbs down or up
● If none of them do it → moderately sad, bothered
Games
● Transfer abstract situations to payoffs (value)
● Values represent any welfare outcome: happiness, points, money, time
● Converting welfare to numbers allows us to model social situations as ‘games’
,Why ‘games’?
● Game theory → simple social and strategic interactions are formalized
● Using concepts like ‘players’, ‘strategies’, ‘payoff’ to analyze them
● Social situations = playing games
● In lab outcomes transformed into financial payoffs based on parameters
● How?
1. Identify the actors
2. Identify the actions of each actor
3. Identify the outcome for each actions and action combination
More complex ‘games’
● More complex interactions
○ more actors
○ more payoffs
○ more players
Prisoner’s Dilemma – models cooperation
● How people make decisions when their outcomes depend on what someone else
does
● Two people are arrested for a crime and questioned separately
● Each have two choices
○ Stay silent (cooperate with the other person)
○ Betray the other (confess)
● If both stay silent → both get a light sentence
● If one betray, other stays silent → one goes free, other gets heavy sentence
○ vice versa
● If both betray → both get medium sentence
● In this context – higher scores relate to worse outcomes
Intuition on cooperation captured by Prisoners Dilemma (Dishes dilemma)
1. Cooperation is mutually beneficial
- we are both better off if we choose ‘wash’
2. Exploiting cooperation can be rewarding
- if I choose ‘no’ and you choose ‘wash’ I am better off
3. Cooperative relationship is risky
- risk of being exploited when i choose ‘wash’ and you choose ‘no’
● Dilemma captures costly cooperation: to benefit the other person i need to sacrifice
something
● Cooperation (wash)
○ sacrifice 1 utility point (go from 3 to 2)
○ so other person can get 2 utility points (from 0 to 2)
● Defection (do not wash) → tempting
○ highest reward for self and no benefit for other person
● By changing the parameters (but keeping structure the same) cooperation can be
more or less appealing
○ if i have to give up more it becomes less appealing to cooperate
Models Cooperation
● Nuclear disarmament
● Working on group projects
, ● Doping in sports
LECTURE 2
Interdependence
● People are interdependent when their actions influence their welfare, and that of
others
● Outcome/ welfare: money, happiness, health, quality of life, grade, etc.
Analysis of Social Situations as ‘Games’
● Take complex situations and model into relatively simple games
● Identify actors
● Identify actions of each actor
● Identify the outcome for each action
● Analyze what the ‘rational’ thing to do for each actor
● Identify unique states (equilibrium, pareto principle)
Stag Hunt Game – Conflict between Safety and Cooperation
● Me and friend go hunting
○ go for stag - big . requires both, needs cooperation
○ go for hare - small - enough to hunt by oneself, no need for cooperation
● During the game cannot reach friend, so which one do we go for?
○ Cooperation gets better outcome (2)
○ Individual is the safe option (1)
○ if both go for reward, both get reward but not as big
● If there is no trust in partner → no cooperation, choosing individual option
Intuition on Safety vs Cooperation captured by Stag Hunt
1. Cooperation is mutually beneficial – both get more if we both hunt the stag
2. Cooperation is risky – if i commit to the stag and you don’t, i get nothing
3. Not cooperating is safe, but modest outcome – if i’m not sure you will cooperate, i
can always catch a Hare
Models
● Adopting new technologies or standards
● Starting a new start-up
● Protests
→ situations where people want to deviate and take risk but need other people to
also cooperate got i to be successful, worth it
Where there is no temptation to defect, will people still cooperate?
● In prisoners dilemma – might defect even if you trust the other person to cooperate
○ defect because of high monetary value (3 instead of 2)
● In stag hunt – only defect if you do not trust the other person to cooperate
○ no reason to defect if you trust other person, because you get high outcome
by cooperating
, Prisoner’s Dilemma Defecting
● Defecting always better than cooperating, no matter what the other does
● Mutual defection is worse than mutual cooperation
Stag Hunt Defection
● Cooperating is better if the other cooperates
● Defecting is better if the other defects
● There is no temptation, only uncertainty about what the other will do
Would people ‘not trust’ in Stag Hunt Game?
Loss of avoidance in selection principle: Evidence from simple stag-hunt games
● Participants played different versions of stag games
● In the original game almost 80% participants choose Cooperation
● Other games show similar levels of cooperation
Prisoner’s Dilemma vs Stag Hunt
● Compare games:
● Not cooperating in PD gives higher rewards
○ the payoff of 7 to defect in ‘strong PD’ vs 3 in ‘SH’ is what explains the
difference between the games
○ temptation to defect vs lack of trust
● Not cooperating in Stug gives less rewards
○ the payoff of 7 to defect in ‘strong PD’ vs 5 in ‘weak PD’ is what explains the
difference between these games
○ more vs less temptation to defect
●
● In stag hunt – high levels of cooperation
● In weak PD – middle levels of cooperation
● In strong PD – little levels of cooperation
Human: played with one randomly matched person in the room
Phantom: played with one randomly matched choice from the past data in the human
condition
→ No difference for human or phantom
● When there is temptation to not cooperate → temptation wins
Chicken game – models conflict vs compromise
● In conflicts, who makes the compromise?
● Models a conflict or compromise dilemma
● Two parties: which one compromises and what is the result?
○ The chicken and the winner
Chicken Game:
What is interdependence?
● People are interdependent when their actions influence not just their own welfare, but
also the welfare of others
● Interdependence: situations where people’s actions influence own welfare and
welfare of others
● Control over own and others outcomes
● Consequences for others → own actions and decisions affect others
● Consequences of others → others actions and decisions affect us
○ Working in a team, group project – if everyone puts effort it makes the job
easier for everyone, if someone doesn’t put effort it makes it harder for
everyone
○ In relationships – each partners behavior influences the other and vice versa
● Outcome is not only monetary, also → health, happiness, quality of life, grade
● Interdependence occurs almost always in social situations
● Very low or no interdependence in individual settings
○ when reading a book, low interdependence
Analysis of a Situation
1. Who does the dishes in a household, how it affects the welfare of each other
2. Situations where people have to cooperate to achieve a greater goal
3. Penalty kick, how people guess the correct kick
4. In risky situations, how people choose risk or compromise
1. Who is doing the dishes?
Welfare of roomates
● Two people choose to wash or not wash dishes
● Welfare represented as thumbs up or down
● If they do dishes together → cooperate, share load → moderately happy
○ one big thumbs up
● If one does it and the second doesn’t → first not happy did everything, second very
happy got results without doing anything
○ double thumbs down or up
● If none of them do it → moderately sad, bothered
Games
● Transfer abstract situations to payoffs (value)
● Values represent any welfare outcome: happiness, points, money, time
● Converting welfare to numbers allows us to model social situations as ‘games’
,Why ‘games’?
● Game theory → simple social and strategic interactions are formalized
● Using concepts like ‘players’, ‘strategies’, ‘payoff’ to analyze them
● Social situations = playing games
● In lab outcomes transformed into financial payoffs based on parameters
● How?
1. Identify the actors
2. Identify the actions of each actor
3. Identify the outcome for each actions and action combination
More complex ‘games’
● More complex interactions
○ more actors
○ more payoffs
○ more players
Prisoner’s Dilemma – models cooperation
● How people make decisions when their outcomes depend on what someone else
does
● Two people are arrested for a crime and questioned separately
● Each have two choices
○ Stay silent (cooperate with the other person)
○ Betray the other (confess)
● If both stay silent → both get a light sentence
● If one betray, other stays silent → one goes free, other gets heavy sentence
○ vice versa
● If both betray → both get medium sentence
● In this context – higher scores relate to worse outcomes
Intuition on cooperation captured by Prisoners Dilemma (Dishes dilemma)
1. Cooperation is mutually beneficial
- we are both better off if we choose ‘wash’
2. Exploiting cooperation can be rewarding
- if I choose ‘no’ and you choose ‘wash’ I am better off
3. Cooperative relationship is risky
- risk of being exploited when i choose ‘wash’ and you choose ‘no’
● Dilemma captures costly cooperation: to benefit the other person i need to sacrifice
something
● Cooperation (wash)
○ sacrifice 1 utility point (go from 3 to 2)
○ so other person can get 2 utility points (from 0 to 2)
● Defection (do not wash) → tempting
○ highest reward for self and no benefit for other person
● By changing the parameters (but keeping structure the same) cooperation can be
more or less appealing
○ if i have to give up more it becomes less appealing to cooperate
Models Cooperation
● Nuclear disarmament
● Working on group projects
, ● Doping in sports
LECTURE 2
Interdependence
● People are interdependent when their actions influence their welfare, and that of
others
● Outcome/ welfare: money, happiness, health, quality of life, grade, etc.
Analysis of Social Situations as ‘Games’
● Take complex situations and model into relatively simple games
● Identify actors
● Identify actions of each actor
● Identify the outcome for each action
● Analyze what the ‘rational’ thing to do for each actor
● Identify unique states (equilibrium, pareto principle)
Stag Hunt Game – Conflict between Safety and Cooperation
● Me and friend go hunting
○ go for stag - big . requires both, needs cooperation
○ go for hare - small - enough to hunt by oneself, no need for cooperation
● During the game cannot reach friend, so which one do we go for?
○ Cooperation gets better outcome (2)
○ Individual is the safe option (1)
○ if both go for reward, both get reward but not as big
● If there is no trust in partner → no cooperation, choosing individual option
Intuition on Safety vs Cooperation captured by Stag Hunt
1. Cooperation is mutually beneficial – both get more if we both hunt the stag
2. Cooperation is risky – if i commit to the stag and you don’t, i get nothing
3. Not cooperating is safe, but modest outcome – if i’m not sure you will cooperate, i
can always catch a Hare
Models
● Adopting new technologies or standards
● Starting a new start-up
● Protests
→ situations where people want to deviate and take risk but need other people to
also cooperate got i to be successful, worth it
Where there is no temptation to defect, will people still cooperate?
● In prisoners dilemma – might defect even if you trust the other person to cooperate
○ defect because of high monetary value (3 instead of 2)
● In stag hunt – only defect if you do not trust the other person to cooperate
○ no reason to defect if you trust other person, because you get high outcome
by cooperating
, Prisoner’s Dilemma Defecting
● Defecting always better than cooperating, no matter what the other does
● Mutual defection is worse than mutual cooperation
Stag Hunt Defection
● Cooperating is better if the other cooperates
● Defecting is better if the other defects
● There is no temptation, only uncertainty about what the other will do
Would people ‘not trust’ in Stag Hunt Game?
Loss of avoidance in selection principle: Evidence from simple stag-hunt games
● Participants played different versions of stag games
● In the original game almost 80% participants choose Cooperation
● Other games show similar levels of cooperation
Prisoner’s Dilemma vs Stag Hunt
● Compare games:
● Not cooperating in PD gives higher rewards
○ the payoff of 7 to defect in ‘strong PD’ vs 3 in ‘SH’ is what explains the
difference between the games
○ temptation to defect vs lack of trust
● Not cooperating in Stug gives less rewards
○ the payoff of 7 to defect in ‘strong PD’ vs 5 in ‘weak PD’ is what explains the
difference between these games
○ more vs less temptation to defect
●
● In stag hunt – high levels of cooperation
● In weak PD – middle levels of cooperation
● In strong PD – little levels of cooperation
Human: played with one randomly matched person in the room
Phantom: played with one randomly matched choice from the past data in the human
condition
→ No difference for human or phantom
● When there is temptation to not cooperate → temptation wins
Chicken game – models conflict vs compromise
● In conflicts, who makes the compromise?
● Models a conflict or compromise dilemma
● Two parties: which one compromises and what is the result?
○ The chicken and the winner
Chicken Game:
