[Game Theory] Volunteers Dilemmas and Global financial Crisis

[Game Theory] Volunteers Dilemmas and Global financial Crisis
in Prisoners Dilemma, Axelrod discovered that played multiple times unlike a one time game, that people tend to cooperate in a prisoners dilemma, hence cartels in polygopolies.

the less heard about Volunteers dilemma, is very similar to Prisoners Dillemma. In Prisoner's Dilemma a cooperating group getting a better payout for everyone relative to the mutual self destruction of self interest. Volunteers Dilemma is just the same, everyone is better off pitching in, self interest tells everyone to "free-ride" that someone else will pitch in the tiny effort to help everyone. They say the bigger the group the larger the chance of no one paying that relatively small cost to make everyone better.

In volunteers dilemma fairness kicks the balls of self-sacrifice. Why sacrifice when this would make people "free-riders" or more appropriately parasites. You can find the game theory formula of Volunteers dilemma in the evolution of Parasites.

So what has this got to do with the Financial Crisis? Well, I err on the side that fault lies most of the time in forces beyond our individual control (a bias I admit). One is I tend to first focus and eliminate that before the constructive act of blaming individuals or myself.

In Timothy Taylor's Economics 3rd Edition from the Teaching Company (2005), I learned of the trade imbalance comes from 2 sets of volunteers dilemma: Saving Rates and Government Spending. But these are both

In Saving Rate, since US govt spends most of the US funds free for investment companies look to foreign investment. Countries like China and Japan with really high Savings rate and the inability to generate good returns on investment for their own people within their own economies invest in the US.

Volunteers dilemma occurs in informed public participation in Govt (note that informed public participation is a barrier in itself). Because it costs more per individual to help everyone else, and there will always be free riders preventing the cost from being equally distributed (which would have lowered the individual cost to the public).

Because of this Special Interest Groups have more control and thus focus on their own self interest at the expense of the greater majority. Unlike the majority who has more resources, special interest groups have more to lose and incentives.

In Savings Volunteers Dilemma affects how Government Spends Money and how much money the Majority has to save. If the US spent as much as other countries with their nationalized health care then that 15% gdp goes to 7% and then it will free up the majorities individual funds to save or brings down government spending to allow firms to get some internal investment funds.

The small percent who benefit from the massive spending on health care are very similar to the special interest groups that beat the general publics volunteers dilemma. Sure you have the best Tech, but that cutting edge tech is only for a few compared to the majority. Nationalized health care means the cost of cutting edge tech wont be distributed to those who are part of the current participants in the healthcare system, only the fewer people who really really want that tech.

Watching the Wallstreet thing happening is a good sign. More participation means a stronger momentum to have everyone pay the smaller cost to help everyone. Diminish the power of special interest groups so that everyone has more control of their own life. And hey, isn't that what liberties and democracy about: less power of smaller groups exerting over the welfare of all?

Ok just had to get it out of my system.