Challenges in social dilemmas

"Institutional arrangements can be understood as responding 

to a world in which there are some sociopaths and some saints, 

but mostly regular folks who are capable of both kinds of behavior."

Colin Camerer (in Ostrom, 2005: 124)

We are reading Understanding Institutional Diversity by Lin Ostrom (2005) in my institutional economics class. It is a slow read, specially the first two chapters where she sets up the theoretical framework. The framework is a guide to analyze social dilemmas (where there are incentives for individuals to pursue actions that are not socially beneficial -- prisoner's-dilemma-like situations). As the book evolves it gets deeper and very interesting. I am still on chapter four, and these two paragraphs called my attention especially:

Without farther progress in developing our theories and models of human valuation in social dilemma situations, those convinced that all human behavior can be explained using rational egoist models will continue to recommend Leviathan-like remedies for overcoming all social dilemmas. . .

And

In focusing on social dilemmas, we need to address how to focus on the role of norms and other-regarding preferences. Simply explaining puzzling findings post hoc, as "they must somehow share some norms," is not a satisfactory strategy in the log run. Focusing on norms and other-regarding preferences is not enough, however, to explain fully how individuals do overcome social dilemmas. Rules are needed to back up these norms (or counteract dangerously escalating negative reciprocity). We then need to dig into the analysis of institutions so that we can understand how individuals adopt norms as well as rules to overcome social dilemmas.

Both are in page. 120. 

In chapter four she explains what she means by norms. In the literature you will find many definitions of norms, institutions, and rules, and frankly in it can be quite confusing. Ostrom defines norms as "prescriptions held by an individual that an action or outcome in a situation must, must not, or may be permitted." p. 121. I see that definition as a clear starting point. She adds "[n]orms can definitely change behavior but may do not. Whether norms have an impact on behavior depends both on the strength of the norm and the context of the situation." p. 123

Addendum:
Chapter four ends with this:

When individuals learn the artisanship of crafting rules, they can experiment and learn to create more productive outcomes (as well as participants) over time. Learning to craft rules that attract and encourage individuals who share norms of reciprocity and trustworthiness, or who learn them over time, is a fundamental skill needed in all democratic societies.

Articulo clásico del día

No había leído el discurso Nobel de Hayek de 1974. Como era de esperarse, el discurso va en la línea del uso delconocimiento en la sociedad. Además, Hayek dedica una buena parte del discurso a lo que el llama “error científico.” El dice: 

Algo que me llama la atención especialmente es la influencia, y al parecer fue mucha, que Warren Weaver tuvo sobre Hayek. Weaver fue pionero en muchas cosas, incluyendo el campo de la complejidad. Uno de sus artículos clásicos es “Science and Complexity.” Este artículo, al igual que el discurso Nobel de Hayek, discute, entre otras cosas, el alcance de la ciencia y ambos resaltan el hecho de que frecuentemente los cientificos confían mucho en ella, y esperan respuestas que, sobre todo las ciencias sociales, no pueden dar. Es sabido que Weaver influyó mucho en Hayek. Esto lo explica muy bien el libro Aid on the Edge of Chaos.

Por cierto, hay una semejanza también entre el discurso de Hayek y el discurso Nobel de Elinor Ostrom en cuanto a la actitud científica hacia la complejidad de los fenómenos sociales. Hayek opina que algunas herramientas computacionales pueden ser útiles para explorar estos fenómenos, no para predecir exactamente variables cuantitativas, por ejemplo, sino que para tener una idea de patrones o tendencias. Por supuesto, Ostrom utilizó (con Marco Janssen, por ejemplo) modelos multi-agente para explorar problemas de los comunes.

Institutional Analysis and Development

This is another interesting syllabus. It is Lin Ostrom's "Institutional Analysis and Development: Micro Workshop in Political Theory and Political Analysis." It is an impressive list of readings. 

Classic article of the day

Wikimedia Commons

From E. Ostrom's article "Beyond Markets and States: Polycentric Governance of Complex Economic Systems"

To explain the world of interactions and outcomes occurring at multiple levels, we also have to be willing to deal with complexity instead of rejecting it. Some mathematical models are very useful for explaining outcomes in particular settings. We should continue to use simple models where they capture enough of the core underlying structure and incentives that they usefully predict outcomes. When the world we are trying to explain and improve, however, is not well described by a simple model, we must continue to improve our frameworks and theories so as to be able to understand complexity and not simply reject it. p. 436

Cultural norms, cooperation, and communication: Taking experiments to the field in indigenous communities

Form a paper by Rucha Ghate, Suresh Ghate, & Elinor Ostrom.

Extensive experimental research has been devoted to the study of behaviour in laboratory settings related to public goods, common-pool resources, and other social dilemmas. When subjects are anonymous and not allowed to communicate, they tend not to cooperate. To the surprise of game theorists, however, simply allowing subjects to communicate in a laboratory setting enables them to achieve far more cooperative outcomes. This finding has now been replicated in many laboratory experiments in multiple countries and in some initial field experiments. Carefully conducted laboratory experiments do have strong internal validity. External validity, however, requires further research beyond the initial field experiments that have already been conducted. In this paper, we report on a series of common-pool resource field experiments conducted in eight indigenous communities in India that have very long traditions of shared norms and mutual trust. Two experimental designs were used in all eight villages: a “no-communication” game that was repeated in ten rounds where no one was allowed verbal or written communication and a “communication game” in which the same five participants were allowed to communicate with each other at the beginning of each round before making their decisions. The findings from these field experiments are substantially different from the findings of similar experiments conducted in experimental laboratories. Subjects tended to cooperate in the first design even in the absence of communication. The shared norms in these indigenous communities are so deeply embedded that communication is not needed to adopt cooperative decisions. Communication does, however, tend to homogenize group and individual outcomes so that communities that are overly cooperative tend to reduce cooperation slightly and those with small deviations in the other direction tend to move toward the optimal solution.

Two enduring lessons from Elinor Ostrom

This article is a tribute to Elinor Ostrom. It explores two enduring lessons she taught: a substantive lesson that involves embracing complexity and context, and a methodological lesson that involves embracing a framework-driven approach to systematic, evolutionary learning through various interdisciplinary methodologies, theories, and empirical approaches. First, I discuss Ostrom's work on environmental commons. I illustrate the two lessons through a discussion of the tragedy of the commons. Next, I explain how the two lessons play a significant role in recent efforts to extend Ostrom's work on environmental commons to knowledge/cultural commons. I draw a parallel between the tragedy of the commons allegory and the free-rider allegory, and show how many of the problems Ostrom explored in the environmental context are manifest in the cultural environmental context. I discuss an ongoing research project that follows the path that Ostrom blazed and systematically studies commons in the cultural environment.

From this new published paper by Brett M. Frischmann (Journal of Institutional Economics, April 2013). No wonder why many economists, anthropologists, sociologist, etc., follow her work. A draft is here. 

Interesting, useful, and readable: Elinor Ostrom adventures with the police

More than forty years ago, Elinor Ostrom began her adventures with the police. In order to combat the conventional view that “bigger means better,” Ostrom pioneered a field work-based framework for measuring police services that utilized consumer surveys and thereby created a community-centered model of analysis for public services. In this paper, we contend that although Ostrom’s career demonstrated the importance of employing multiple methods, her most enduring contributions and legacy came from on-the-ground research. Her case studies and field work proved to be necessary for examining complex systems beyond the state-market dichotomy, and these methods of analysis should be defended as critical for inquiry into the variety of institutional arrangements.

Interesting, useful, and readable: Boettke, Lemke & Palagashvili (January 2013).

The Woman Who Changed a Profession

Lin completed her degree in three years in time to marry her high school sweetheart, Charles “Chuck” Scott. Immediately after college, in 1954, they moved to Cambridge, MA so Chuck could attend Harvard Law School. Lin supported them by working first as a secretary and soon, after making a position for herself in what today is called “human resources,” in administration at the electronic test equipment manufacturer, GenRad. Following Chuck’s graduation from law school, they returned to Beverley Hills where Chuck began a practice in entertainment law and Lin began to think about graduate school for herself. However, when Lin returned to UCLA, it was not as a graduate student, but as a secretary. She began taking classes in public policy and in economics as time allowed. Lin was not admitted into the economics department graduate program and there were many in the political science department who opposed her acceptance into their Ph.D. program. Her family likewise did not support her plan to pursue a career, but she persevered. She and Chuck Scott divorced amicably and Lin went on to the life we all knew.

That is from a fascinating obituary of Lin Ostrom (1933 - 2012) by Herzberg and Allen (October 2012) published in Public Choice. 

The first lines of the obituary:

There are few people whose life and work has the capacity to change an entire profession. Elinor Ostrom was one such person, which makes her loss on June 12, 2012, such a great blow to the discipline she loved. Her work changed how we think about institutions of governance. She taught us to be careful about generalizations and to embrace complexity rather than avoid it in our models. To those who knew this work, it was not surprising when the Nobel committee recognized those contributions by awarding her the 2009 Nobel Prize in Economics (The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel) with Oliver Williamson.

It is awesome that Public Choice allows free access to many new articles!