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More Prisoner's Dilemma
The story of the prisoner's dilemma can be retold with a
slight alteration. Assume that our two criminals belong to
an organization of criminals that will kill any member who
confesses to the police or testifies against other members
of the organization. With this change, the outcome of the
story will tend to be totally different: both will remain
silent. Self-interest and group interest are identical. This
happens not because the motives or goals of the criminals
have changed, but because incentives or payoffs have
changed. The table below shows the new payoffs. A paradox of
this case is that imposition of this "death penalty" can
actually improve the well-being of individuals making up the
group. One would not normally think that making possible
outcomes worse could improve results.
For Hobbes, the introduction of government could change
payoffs so that cooperative behavior would replace the "war
of all against all." But Adam Smith better illustrates the
results of this second story. His Wealth of Nations
argues that the well-being of the group can be consistent
with the pursuit of self-interest if the right incentives,
which Smith said were free trade and competition, existed.
Nowhere does he explain his point better than when he talks
about the butcher, baker, and brewer who provide quality
products because they love themselves, not because they love
humanity.
If the individuals in a group are motivated by
self-interest, the group cannot survive and prosper unless
it finds ways to make individual self-interest consistent
with group interest. This is a problem for the largest of
organized groups, a nation, as well as for many of the
subgroups within it. There are two basic ways to deal with
this problem. One is the Hobbesian way of regulation and
planning from the top. The other is the Smithian way of
private-property rights and the market.
Copyright
Robert Schenk
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