472NOT09.txt
         	Prisoners Dilemma & Chicken     September 8, 1996

PRISONERS DILEMMA: game of conflict in which reward for unilateral
non-cooperation exceeds both benefit for mutual cooperation AND cost of
mutual conflict. Penalty for mutual non-cooperation is not as bad as
penalty for exploited cooperation--the suckers payoff. No threats or
commitments.

Prisoner's Dilemma: situation of mutual defection. Two incentives to
defect: defensive and offensive--its better to defect if you think
opponent may defect; its better to defect if you imagine that adversary
may not. So, irrespective of what the other side may be do, there are
defensive and offensive incentives for defection. Mutual cooperation
possible if players expect to meet again.  Future can cast shadow on
present and encourage cooperation.

CHICKEN: game of cooperation in which the penalty for mutual
non-cooperation is worse than penalty for exploited cooperation. The
suckers payoff is not so bad in chicken! Deterrence and coercion are more
relevant to Chicken than to Prisoner's Dilemma.

CRITICAL RISK: In coercive situations like chicken, estimate the degree of
risk you are willing to endure before yielding. Your Critical Risk is a
function of your utilities, e.g., what you stand to gain or lose in a
given situation. Then compare your critical risk with your estimate of the
other sides likelihood of carrying out a threat, i.e., threat credibility. 

If your CRITICAL RISK is higher than the others threat credibility, stand
fast. If your CRITICAL RISK is lower than the credibility of the
adversarys threat, comply. 

THREAT CREDIBILITY: enhance likelihood of carrying out a threat via
irrevocable commitments to foreclose alternatives to compliance, appear to
lose control over subordinates, pretend to be reckless, seem to be
irrational.

Theory of COLLECTIVE GOODS: situation in which it is not rational for
members of groups to pay their share in order to obtain a good that is
collectively enjoyed. Individuals contributions have little or no effect
on whether they obtain a good. If you expect others to cooperate by paying
dues, defector can enjoy collective good without paying cost. Individual
defector also avoids suckers payoff. Ways out of collective goods problem:
coercion or provision of selective incentives, e.g., rewards for
dues-paying other than the collective good. 

DOLLAR AUCTION GAME: paradox in non-cooperative behavior and escalation.
Auctioneer auctions off a dollar to highest bidder. Both highest and
second bidder pay. Critical zones passed when sum of two bids exceeds a
dollar and when one of the bids exceeds a dollar. Threats and coalitions?