Sunday, April 16, 2017

people cooperate to reduce uncertainty

From Thoma's site. Here we have what?  Agents implicitly cooperating on price compression.  As the uncertainty increases cooperation increases. As uncertainty decreases then we get a free rider problem, there is a known cheat. This is very similar to finding otimum congestion.  It is like the TOE is going everywhere.
Luigi Butera and John List have examined how cooperation is impacted on by uncertainty — and not just any uncertainty but Knightian uncertainty where outcomes cannot easily be described by a probability distribution. They examine a situation where experimental subjects are contributing to a public good whose returns are uncertain and where individuals may or may not hold information regarding those returns. What this means is that individuals do not know whether people are not contributing because of free riding or because their do not have high information regarding the quality of the public good they are contributing too. In some sense, you might think this might make free riding issues even worse for, if you have a draw that suggests the public good has a high return and you know that others have differing information, you may not be confident they will follow you and contribute. In other words, you may anticipated more free riding which causes cooperation to unravel faster. The alternative view is that if you have no information and observe some cooperation, that might signal that they know something you don’t. But even there, for full rational agents, why cooperate when you don’t have to. If I had to guess before reading the abstract of this paper, my guess is that uncertainty makes things worse. We saw instances of this in a public good game instituted by Stephen King that I outlined in Information Wants to be Sharedproblems that were alleviated by crowd funding models that provided more information.
I have been watching game theory for a while and noticed the theorists had added uncertainty and semi-repeatability to their studies recently.

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