This post is essentially an extension to my continuing flirtation with game theory and its real-life application.

As our society advances, we have to deal with the consequences of our previous actions. Environmental problems that resulted from unsustainable usage of limited resources on Earth is a prime example of this. Governments and international bodies now put a lot of effort into addressing this issue. The focus has been placed on raising awareness, and it has certainly become somewhat of a social trend (think about the movie Avatar). The question is whether giving people information alone will be enough. Will the knowledge motivate us to act?

It probably will in most cases… assuming everyone has the same moral standard (or can be succumbed to peer pressure). Supposedly moral individuals will act to protect the environment (at the cost of their present material benefits) because they care about the future generations, self-preservation and anything that is morally right. From the game theory perspective, their payoffs from protecting the environment is higher than from not protecting. However, people are different, and we cannot just assume that everyone will behave in a moral for us way. In the end, a person does not have to care about the future if he thinks he has no stakes in it. He will rather use the most of what he can access now and get a higher payoff from polluting. We can call him a selfish moral monster and humanity might become extinct because of his behaviour, but he will be dead by then anyway and does not care. This possibility is very difficult to accept.

Nevertheless, game theory allows this to happen. Game theorists are not concerned with the motives behind each individual action, they care only about the fact it has been chosen (hence must have given a higher payoff). Perhaps, this makes it easier for them to predict all possibilities and incorporate all types of behaviour. Given this, what can we do to protect our environment? In academic circles, the Tragedy of the Commons has been used for a long time to illustrate what will happen if we use resources unsustainably. However, not many focus on the actual solution to the problem, they clearly thought that showing people the problem is enough. We need to rely on something more than people’s morality. Mechanism Design is a branch of game theory that deals with this. It tries to change the conditions of the game in such a way that polluting will directly affect everyone negatively at present. This will in turn prompts each individual, no matter how moral he or she is, to act in the desired way for us.

John Lennon’s famous song Imagine is about the perfect utopian society, which in many sense is a communist society. It is the society most of us dream about. The idea of sharing resources responsibly is so great, but at the same time so unobtainable. However, game theory might just give us a clue on how to solve existing social problems and make little steps towards that imaginary perfect society.

John Lennon – Imagine

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