The Durk Pearson & Sandy Shaw®
Life Extension NewsTM
Volume 7 No.
1 • February 2004
The paper that follows was written for and published in Liberty magazine (February 2004, pp. 29-31). We are contributing editors to Liberty and highly recommend it to lovers of freedom. (Published by the Liberty Foundation, 1018 Water St., Suite 201, Port Townsend, WA 98368. Tel 800-854-6991.) If any of you reading this are not lovers of freedom, we would appreciate it if you would discontinue reading our newsletter.
Winning the War of All Against All—
Searching for Lonerville
By Sandy Shaw & Durk Pearson
Remarkably, recent theoretical and experimental studies by two entirely different groups of scientists studying cooperation by humans in collective enterprises (public goods) now provide evidence to support the idea that being able to opt out of public goods games maintains a higher percentage of cooperation (people willing to support the collective enterprise), while not being able to opt out leads to much lower levels of cooperation, along with a rise in the number of defectors (who contribute nothing but take the benefits of the collective enterprise).
The latest work on this development appeared in the 25 September 2003 Nature. The authors introduce their paper by explaining that in public goods experiments, initial cooperation usually drops quickly, almost to zero. Mechanisms used to maintain “cooperation” include punishing defectors (Communist/Nazi punishment society model or the Regulatory State or, at a local level, boycotting or shunning) or the need to maintain good reputation. As the authors note, these mechanisms require that defectors be identified. (Defectors are also likely to attempt to deceive others in an attempt to establish a phony “good” reputation, making it more difficult to distinguish the real good reputations.) Theorists have proposed a different mechanism for maintaining cooperation that works under conditions of anonymity.
The proposed mechanism is to allow optional participation in the public goods game, where people can choose not to participate in the game; those people are called “loners.” The authors staged experiments in which participants could be either cooperators, defectors, or loners and show that on average, cooperation is maintained at a substantial level. The “return” to each individual in the cooperators and defectors groups is calculated based upon the amount of money the cooperators pay into the public goods pool (where multiples of the money contributed by cooperators is added to the pool by the experimenters) divided by the number of individuals in the game, including defectors.
The authors displayed the group decisions (cooperator, defector, or loner) of the group (without identifying who made what decisions). The “decisions” were faked for seven rounds so as to test the predictions of the theory, e.g., how the players would respond to the different levels of cooperators, defectors, and loners. In the eighth round, the prediction was that if you started the round with mostly loners, you would then see more cooperators; if you started the round with mostly defectors, you would see more loners; if you started the round with mostly cooperators, you would see more defectors. This is what the authors call rock-paper-scissors dynamics. They then ran 50 rounds without manipulation to see what sort of oscillations would appear among the three groups. They found that the predicted strategy became most frequent significantly more often than did the alternative strategy (P < 0.001, n = 20, paired t-test, t = 6.588, 2-tailed). As they put it, “As the model predicts, after loners have the highest frequency, cooperators become most frequent, thereafter defectors, and then loners again. After a prevalence of cooperators, defectors become most frequent, followed by loners, and then cooperators again.” An excellent example of this dynamic is how de Tocqueville marveled at what he saw as an America dominated by cooperators. Most of the people arriving in America were opting out of collective impositions in European countries and, hence, were loners. The prediction is that when loners are most frequent, it is followed by a prevalence of cooperators. Moreover, most Americans lived at that time in small towns, which is conducive to cooperation.
The authors stated, “We found that volunteering (the option to choose between joining the public goods group and taking the loner strategy) indeed protected cooperation in the public goods game by inducing small group sizes [that remain in the game]. On average, there was a rather stable frequency of cooperators that was higher than what is usually found in public goods games after several rounds. . . . It is not just the fact that volunteering is possible that induces cooperation, but rather that volunteering reduces public goods groups to small sizes for which the individual cost-to-benefit ratio becomes more favorable. . . . Even though defectors are still better off than are cooperators in each group, cooperators do better when averaged over small groups according to Simpson’s paradox.”
The earlier paper on the same subject used a mathematical model of interacting cooperators, defectors, and loners. The researchers made certain assumptions based upon r, the payoff to society (of the public goods); the individual payoff is the societal payoff divided by the number of individuals in the society. The individual investment is normalized to 1 and multiplied by a factor r (an arbitrary number set by the researchers to represent, in theory, the collective benefit of the public good in question if everybody cooperated). In fact, most public goods have an r of less than 1, meaning that it is in the interest of all the players to defect. However, the researchers found that adding an opt-out option (loners) changes the results dramatically. In a game of cooperators and defectors (no loners permitted), the r must be quite large to support cooperation (cooperation increases rapidly from nearly 0 at r ~= 4). In the cooperators/defectors/loners game, cooperators emerge from nearly 0 at r ~= 2, persist at 35–40% of the group to r ~= 3.90, and then rapidly increase at higher r. In fact, the authors report, at r = 4.17 and above, it is not profitable to choose to be a loner, and loners essentially go extinct.
A finding from the earlier paper is that cooperation is higher in small, local groups than in nonlocal (what they call “well mixed”) groups. Not only are the benefits of cooperation higher in a small group, but reputation is more easily discerned.
A good, concrete example of how reducing the size of the group results in more benefits to cooperators is how the two of us, living in a small rural town in Nevada, have become involved in much public goods activity by volunteering our time to advisory groups and committees overseeing various public projects. This is something that we never did when living in the Los Angeles beach community from which we escaped 12 years ago; it would have been a total waste of our time. Here, our participation allows us to help steer public activities in the “right” direction (from our point of view), toward more freedom.
When we decided that we had to get out of not only the Los Angeles beach community where we lived, but California itself, we engaged in a systematic search for someplace (limited to the United States) where property rights and personal freedom were high, and regulation and taxation were low. We considered a number of states, such as Wyoming, but Nevada, with no state income tax and, in the rural areas, low population density, was also very convenient for moving our many tons of possessions because of its relative nearness to Los Angeles. Durk made telephone calls to all the rural Nevada counties. When he called one of the counties, he asked the courthouse employee “Can I speak to someone in the land-use planning department, please?” The woman answered, “We don’t do that here.” Then Durk asked, “Well, then can I speak with someone in the zoning department?” The woman replied, “We don’t do that here, either.” Durk continued, “Then can I speak to someone in the building-permit department?” She answered, “Young man, before you waste any more of my time, we don’t do that here. You’re supposed to build according to the Uniform Commercial Building Code, but if you don’t and it falls on your head and kills you, that’s your funeral, because we don’t do building inspections either!” “Wow,” Durk said, “that sounds like our kind of place.” “Well,” she replied, “if that is your kind of place, we’d love to have you up here.”
Lonerville is a place where there aren’t many public goods foisted upon residents, so people don’t have to (often) play the game. We drove through the different towns in the winning county, looking for clues telling us that we had reached Lonerville. As we entered the town that is now home, we saw several large piles of rusting junk in people’s yards (right on the main thoroughfare through town and directly across the street from the county courthouse). It could have been trash or it could have been potentially useful pieces of scrap, but it was definitely messy. Sandy said, “Wow, this looks like our kind of place!” A town that doesn’t try to stop people from keeping whatever they like on their own property is a property-respecting town that is unlikely to have many rules and regulations. Yes, we found Lonerville and are doing our very best to keep it that way, even though the best way to do that is to sometimes be cooperators.
The published studies and experiments suggest strongly that if we are to avoid being taken over by defectors (as is surely happening now), opting out is a practical solution. “All” that needs to be done now is to remove the criminal defector class from control of the political process by introducing “opting-out.” The establishment of convincing evidence that permitting opting-out leads to more voluntary cooperation (and, though not mentioned in the paper, less of the highly dangerous war of all against all) is a very important first step.
Vernon Smith won the Nobel Prize for his development of just such game theory experiments as were done in this study. Hence, it is not too much to expect that recognition for these results favoring voluntarism to maintain social cooperation will eventually take place. Just the fact that the two papers on the rock-paper-scissors dynamic cited below appeared in Science and Nature is evidence enough of the acceptance of these findings as solid scientific contributions. (Considering how left-wing these journals are, especially Science, we wonder how well they understand the revolutionary implications of these studies.)
Of course, these experiments are simplified from reality by the fact that, for one thing, they involve a single public good over which people are choosing to cooperate, defect, or (if allowed) opt out. In the real political world, each individual who can make a choice has to consider huge numbers of different public goods, where some will provide gain and others loss. Reflecting the studies, people are not pure cooperators, defectors, or loners, but change in response to what other people do (or what they believe other people do).
Finally, we note that deriving libertarianism from game theory experiments is a totally different approach than that of deriving libertarianism from a noncoercion moral principle. Though the fraction of the population for which a morality of noncoercion or even personal freedom is at the top or near the top of their values is probably fairly small, the number of people who are fearful of societal breakdown because of increasing defectors and decreasing cooperators (and more “command and control” by governments) is probably a great deal larger. Open borders are incompatible with a continuing (and growing) welfare state or progressive taxation, but both have very powerful political support. Allowing loners to opt out of both the costs and benefits may be the most practical way of preventing the rapidly progressing collapse of social cooperation into a Hobbesian war of all against all. The open borders/welfare state conundrum may ultimately make the future brighter for liberty. (That is one reason why it is advisable to extend your lifespan, because this may take quite some time; still, when the tide turns against the public goods games dominated by defectors, it is likely to happen fast.)
- Hauert et al. Volunteering as red queen mechanism for cooperation in public goods games. Science 296:1129-32 (2002).
- Semmann et al. Volunteering leads to rock-paper-scissors dynamics in a public goods game. Nature 425:390-3 (2003).
- See, e.g., Fehr and Fischbacher. The nature of human altruism. Nature 425:785-91 (2003).
- In fact, where we live in Nevada, the population density still meets the U.S. Census Bureau’s definition of frontier (fewer than 1 person per square mile). Opting out, until the “close” of the Western frontier in America, was relatively simple, but not without costs. Moving to Nevada cost us a lot, but we saved most of the costs in the first year because of escaping California’s state income tax.
© 2003 Sandy Shaw & Durk Pearson