The Israeli-American mathematician and economist, winner of the Nobel Prize in Economics in 2005, for his work on conflict and cooperation through the analysis of repetitive game theory, explains the logic of human interaction in the long term, which can be applied in multiple areas such as: economics, political science, biology, etc.; but his main interest is in war and peace, and the destruction of the environment. At 93 years old, he covers the main conflicts throughout recent history, and exemplifies how, through appropriate incentives, human behavior can be directed towards the general good and world peace. Example that could be applicable to extreme polarization in the future of our country.
Both in the theory of cooperative games and in economic theory in general, “incentives” are very important. How subjective are these incentives, how much does the subjective influence cooperation?
Incentives are not subjective. There are very simple examples of incentives, and that is that people work and are paid for doing their work, but working is not an incentive, working is getting paid. But an incentive to work hard and do your job well is that if you do your job very well, you will get promoted, that is an incentive to work. Another example of an incentive, a little more complex, we all want less paper to be used, less plastic, all these things are very harmful to the environment, so in Switzerland they sold garbage bags for ten francs, it’s a lot of money, it’s like ten dollars or something like that. It’s a lot of money to throw trash in a plastic bag. But they won’t pick up the garbage if you don’t put it in a plastic bag, which costs ten francs, what incentives does that create? Create an incentive to produce less waste. In other words, not throwing away as much, that will make people buy things that don’t have a lot of packaging. This also incentivizes the manufacturer to sell, for example, fruits, berries or vegetables without much packaging. And to go back and create your incentives, that very important element. Another example, socialism is built on the motto that to each according to his needs and his abilities… we should satisfy the needs of everyone to the best extent possible, and everyone should work as hard and as best as they can, that It’s a wonderful idea. I subscribe to it with all my heart and with both hands, there is only one small thing that is wrong, that does not work, that is the only thing wrong with it. And why doesn’t it work? Because of the incentives, everyone receives according to their needs, and you don’t have to work because if you need to eat, someone else will give it to you so you don’t have to work, or at least you don’t have to work very hard, you don’t have to put any effort into it. it. So, it’s a wonderful idea, but it doesn’t work because people don’t work. In China or Vietnam, for example, in 1986, almost forty years ago, with the communist government, with the socialist economy, people were dying of hunger. Then, on August 1, they moved to a market economy, their economy was no longer socialist and the government was and continues to be a communist dictatorship, but the economy is market, it is not a socialist economy.
Following the line of psychology, anxiety is also a factor that can go against cooperation, because ultimately it is in the long term that people cooperate, what is the importance of the present tense?
People cooperate because it is convenient for them to cooperate, each one helps the other, and in that way all the people involved in the cooperation win, because everyone helps the others, but what makes people cooperate? That they do good to each other because, even if they don’t get anything in return right now, they hope that if you help another, in the future, when you need help, you will also receive it. So, it is worth helping other people who cooperate because when you need help, they will help you, and they will help you because they expect you to help them in the future, that is really cooperation, when you look at it in the long term, it is really Something selfish is good for you.
You say that “repetition acts as a reinforcement mechanism: it leads to cooperation being achieved in those cases where it cannot be achieved in a one-time game”, what is the importance of repetition?
Repetition is very important. For example, cooperation is much more likely to occur when you have a long-term horizon. Suppose a street vendor knocks on your door and tries to sell you some milk. You would not buy that milk because you are afraid that it is not in good condition, but if you go to your neighbor’s store and buy milk from them, you know that they know that selling you spoiled milk will make you not return to the store, you will go to a different store. They have a reputation to maintain, and maintaining a reputation is something that happens over time. Even if someone comes to your door and wants to sell you something more expensive, like a camera or something, you wouldn’t buy it from them because they don’t have a reputation to uphold. That’s the reason you go to a store, because they have a reputation to uphold and if they sell you bad merchandise, not only will you not come back, you’ll tell all your friends and the store will close. People cooperate much more in a long-term interaction than in a one-time interaction, because in a long-term interaction, they know that if they don’t cooperate, if they cheat, or if they aren’t friendly, it will interfere with the next interaction.
In addition to the future, the threat of punishment also plays an important role in the theory of cooperative games. Do human beings need the threat of punishment to correct their behaviors?
Absolutely. They need it because very often in a single interaction, cooperating means losing something in the short term. For example, when you have a common good like a lake with fish that many farmers who live nearby use, if everyone goes and fishes as much as they want, there will be no more fish, the fish will not reproduce, and you will have nothing to eat for the next period. So farmers and residents near the lake have to be careful not to overdo it, not to overfish. Now, if it were a one-time affair, everyone would take out the fish in large quantities, that would kill the fish and there would be none for the next period. You need to punish those people who overfish in one period, because otherwise they will ruin the lake for everyone.
You say that it is not ethics that drives cooperation in game theory, but selfishness. Do you find that it is not human nature to do good, but that it always requires “incentives” or “avoiding punishment?” , etc.?
Ethics was developed as a way to promote one’s own good, as I gave an example, it is ethical not to fish too much in that lake, but in fact it is good for everyone. And if people fish too much, it is considered unethical, it could even be considered a crime. But let’s say it is considered unethical, and ethics is the way to think about it, but in fact, it promotes the well-being of everyone.
John Nash won the Prize for his development of balance, Reinhard Selten for his development of perfect balance, what does one and the other balance consist of? What is the difference?
John Nash discovered what we call balance, and Reinhard Selten the perfect balance. The difference between Reinhard Selten and John Nash is that in Nash the idea of equilibrium exists from the beginning of the game, each side has the best possible strategy, given the strategies of the other side, that is in Nash’s formulation, and does not necessarily follow being like this throughout the game. Admittedly, it is the best possible given the other side’s strategies at the beginning of the game, but not necessarily as the game progresses. In Selten’s formulation, everyone is supposed to do their best at every moment, given that everyone else is supposed to do it. Selton also takes into account the progression of time and continues in balance. So in Nash, it is in equilibrium at the beginning, and in Selten, it continues in equilibrium throughout the game.
You say, “cooperative game theory consists not only of describing all possible cooperative outcomes, but also of choosing between them. There are several ways to do this, but the best known is perhaps the concept of the core. Could you expand on this idea? Could these possible cooperative results be infinite?
A coalition of players may not be able to improve its benefits for all its members through their own efforts, that is the core concept. The core is a set of results, it is not a single result, it is several possible results. And each of those outcomes is such that a coalition of players can do better on their own. It could have several results. Let’s take a very simple example, if you want to sell your house to someone, both you and the buyer are negotiating and there will be a price at which you will finally end up selling the house. There can be several different prices, not just one, and all of those prices, could be higher or lower, are at the core. And in a two-person situation like this, the core is not a very interesting thing. Of course, there is one thing that is like that, you have a minimum price, you are not willing to accept less than that, you would prefer to keep the house and not sell it, that is the minimum you can get. And the most that can be achieved is that if the buyer exceeds that price and is not willing to pay more than that price, he would prefer not to buy the house. But there are many prices in between, and they are all in the core.
Listen to the full interview on Radio Perfil.
by Jorge Fontevecchia