The Public Choice Society

The Prisoner’s Dilemma

Distributive Justice

Philosophy 146 / Political Science 103Fall 2008

Monday - Wednesday 2:50 PM- 4:05 PM Social Science 139

Michael

Office: Perkins Library, Room 408office phone: 660-4301

Alexander

Office: 203-A West Duke Building (East Campus)office phone: 660-3047

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Duke Academic & Exam Calendar

INTRODUCTION

The course begins with the attempt to understand the problem of coordination and cooperation in groups of humans, and for that matter in any collection of independent organisms. But it connects the problem of efficient solutions to the problem of coordination to the ethical problem of justice in distribution, or access to resources and power.

To understand “social cooperation” one needs to understand the problems that social cooperation has to overcome. In this respect, the prisoners’ dilemma is a foundational element in the study of social institutions. We begin with the PD in its simplest form and then extend to the iterated case and the more relevant many-person version. We shall deal with the theory of public goods, and offer several applications of PD reasoning, including the Hobbesian account of the origin of the state, the Lockean account of the origin of property, and the Demsetzian account of the origin of property rights. We will consider the experimental evidence in relation to PD and social dilemma games. We also examine the related “trust problem” and its implications for the possibility of pre-commitment.

We then turn to the problem of justice, distribution, and control and direction of power. The object of this part of the course is two-fold: first to examine an issue that is of enormous interest in its own right: second, to isolate the disciplinary differences and complementarities in the philosophical, political and economic approaches to this issue. So we shall consider the pure ‘ethics’ of distributive justice as understood say by Marx, Rawls and Nozick. We shall also deal with the feasibility of various distributive schemes, focusing on “incentive effects” and their implications. Finally, we bring together the problem of coordination and distribution by examining the problem of power in anarchic systems of international relations.

ASSIGNMENTS & GRADES

One (10-12 page) Paper (30% of final grade): You will be asked to write one paper, of no more than 12 typed, double-spaced pages, or 3,000 words, whichever is smaller. The paper will be due Monday, December 1, at the beginning of class. Papers not turned in at that time will be considered late. Late papers will lose a letter grade per calendar day. Papers turned in after class will be counted as one day late.
Class Discussion and Participation (10% of final grade): Each student is expected to attend class, prepared to participate in the discussion that day. Readings should be done before class, and the instructors will call on students to answer questions about the readings.
Class Assignment—Choose and Play a Strategy, or finite state automaton (FSA) (10% of final grade): You will be asked to choose one of 16 strategies, or “players,” for an Axelrod style tournament. Your FSA will be played against all n FSAs in the class (yes, that means you will play against yourself). In order to get above an “8” on this assignment, you have to have above the median score for the entire class. For more information, see this web site. You will be asked to choose one of the 16 strategies, and you must write a one-page essay on why you made this selection, given that your induced goal is to come in first in the tournament.)
Midterm Exam (20% of final grade): The midterm will be partly multiple choice, partly short answer essay questions. Practice questions will be handed out the week before the exam is given.
Final Exam (30% of final grade): Standard blue book exam, in the regularly scheduled exam period (Friday, December 12, 2 - 5 pm). The final will be comprehensive, with an essay format. Full credit will only be given for answers that integrate the material in the course, rather than simply regurgitating back the separate parts.

TEXTBOOKS

The following books (listed here alphabetically) are on order at the Regulator Bookstore on 9th Street.

Axelrod, Evolution of Cooperation, Basic Books

Gaus, J., On Philosophy, Politics, and Economics, Wadsworth

Skyrms, Evolution of the Social Contract, Cambridge University Press

In addition, there are a number of different readings available in electronic format on the web. In most cases, these can simply be obtained by clicking on the reading in the on-line version of this syllabus, which will direct your browser to a pdf or html version of the required text.

In the case of both the books and the reserve readings, the last name(s) of the author(s) constitutes a unique identifier, except for the two Skyrms books. References in the syllabus will therefore simply be to these names (plus, in the case of the Skyrms books, the initials of the book’s title, ESC or TSH). The student is responsible for having read the assigned material before class, and before discussion section. Lack of preparation will be reflected in your participation grade, so:

Do the reading!

TOPICS AND READINGS

Aug 25, 27, and Sept 1: Introduction—Gerald Gaus, On Philosophy, Politics, and Economics, Chapters 1-2.

Sept 3, 8, 10, and 15: The Competitive Market as Description/Prescription

The descriptive problem—The competitive market model fails to account for transactions costs, of either the “frictional” or “strategic interaction” sorts.

Reading: Munger, Analyzing Policy, Chapters 3-4 Radford article (In Munger reading), on Blackboard under “Assignments,” in the “Readings” folder.

The prior problem--Emergence of institution of the market and preexistence of institutions it requires—trust, fiat money, firms, division of labor. Spontaneous order is actual. How is it possible?

Philosophers want to know why we should obey the law. Social scientists want to know why we do obey the law (if we do). Social scientists are more likely to focus on why social and political institutions (like laws) exist, how they emerge, why they persist, how they differ and why they change. As Hume argued in “Of the original contract”, institutions don’t emerge by decision or design. Nor can coercive force alone maintain them. One explanation which has emerged in recent decades depends on the notion of ‘spontaneous order.’ Spontaneous order is simply the appearance, with no external direction or coercion, of ordered processes. F.A. Hayek’s conception of spontaneous order goes something like this: The theory of spontaneous order is concerned with those regularities in society, or orders of events, which are neither

the product of deliberate human contrivance (such as laws or economic planning) nor
purely natural phenomena (something like gravity, or the weather, which exist in complex and apparently orderly forms independent from human actions).

Spontaneous orders, in this sense, are conventions, regularities, and social practices arising from human action but which are not the result of any specific human intention. But we can’t just assume the existence of spontaneous orders in the social or economic realm any more than we can assume the moral rightness of political cohesion. That is, one would have to demonstrate that spontaneous orders really exist, since it is by no means obvious.

Reading: Norman Barry, The Tradition of Spontaneous Order, “Adam Smith, 1723-1790”

F. Hayek, "The Use of Knowledge in Society," American Economic Review, 1945. (Blackboard)

Normative problem of welfare economics—weakness of Pareto optimality, how do we choose among Pareto optimal outcomes? Suboptimal outcomes due to market failures.

Reading: Economics and Economic Justice. and Distributive Justice, Stanford Encyclopedia of Philosophy.

Sept 17 and 22: The Need for Prior Political Institutions, Coercion, and Trust

How can someone, or some group, morally exert coercive power over one or more other competent adults, forcing them to do something against their will? We don’t mean just the successful use of force, in the sense that the other person's behavior is compelled. We want to ask what legitimates the use of force by a government to compel adherence to government edicts or laws. This question is normative, not empirical or descriptive — we want to know what makes the use of power morally right, not merely what causes a government to use force or makes force effective in producing obedience.

divine authority either depends on unverifiable religious claims or it forces us to accept that anyone who successfully gains political power has political authority.
natural subordination relies on dubious empirical assumptions about the inequalities among people, and even so cannot account for political authority over those in the elite.
perfectionist theories of political authority assume that there can be a group of people who have clear knowledge of what is good for a community. But even if this were possible, it implies that no other governments have had any political authority.
consent based theories seem more plausible, but they need to answer many questions to succeed, such as: Who needs to consent? What about individuals who don't consent? What constitutes consent? What are the limits of the authority gained by this consent?

Readings:

Jonathan Bennett’s “translation” of Hobbes’ Leviathan, Chapters 1-31

Jonathan Bennetts’s “translation” of Locke’s Second Treatise, Chapters 1-6

David Hume, Of the Original Contract and Of Passive Obedience

Background III—Thinking Strategically-Basics of PDs

Readings:

Sept 24, 29, Oct 1, 6: Game Theory to the Rescue?

a) PD as model for rationality of cooperation and acceptance of enforcement. No solution to the PD: Can we model the moral problem of legitimizing state coercion as a PD? Can we model the obstacle to spontaneous order as a PD? The “prisoner’s dilemma,” in its classic form, is always a 2x2 game with the following properties:

There is exactly one Nash Equilibrium
There is exactly one Pareto Optimum
The NE and the PO are different. That is, the PO is not a NE.

There are many other games that are related, but only 2x2 games with these properties are PDs. Question for discussion: how wide spread are PDs, as an empirical matter? Are they simply intellectual exercises, or do they teach us something about the world?

Readings: (Chapters from that game theory book, on reserve)

Prisoners Dilemma Stanford Encyclopedia of Philosophy

Play a PD on-line (What strategy does Serendip play?)

Jean Hampton, Hobbes and the Social Contract (CUP, 1986). Chapters 1-2 (e-reserve)

b) Define solutions to strategic games—NE, DS, illustrate with various games.

(Chapters from Dixit, Games of Strategy, on reserve)

Gerald Gaus, On Philosophy, Politics and Economics, Chapter 4.

c) PD not the right model of the game of escaping state of nature. Hobbes said, “Covenants, without the sword, are but words.” Is that true? Or can cooperation emerge from an anarchic setting? In other words, can groups of organisms cooperate without external coercion or design?

Axelrod, Evolution of Cooperation (textbook, entire)

Axelrod, Evolution of Cooperation (entire)

Axelrod Tournament Demo Page (Chris Wood) (NOTE: You have to choose your own strategy, and play an nxn tournament. Assignment due Feb 27!! You are graded in part on your competitive performance…)

October 8: Evolution in Games

Formal game theory v evolutionary game theory, folk theorem: Can game theory and evolutionary theory give us an account of rationality that explains our conception of justice? Can it also provide an answer to the question, why should we be just? And even if the answer is “yes,” is such a contractual understanding reflected in stable social and psychological processes in human societies?

Readings:

K. Binmore, Review of Axelrod’s Complexity of Cooperation

Other Iterated Games and the emergence of norms.

Skyrms, Evolution of the Social Contract Chapters 1-3

FALL BREAK: No class on October 13, Monday

Oct 15: Review for Midterm (Munger in Charlotte for Debate! Tune in....)

Oct 20: In-class Midterm

Oct 22, 24: Norms and Passions—Can they solve the problem? Emotions as Commitment Devices

If we could all simply agree to behave morally, society would be better off. One could argue that moral action is intrinsically better, but it also follows from the fact that transactions costs and monitoring / enforcement costs are much lower, enabling many more welfare-enhancing transactions to take place. Can we agree to be moral, since it is universally good (but perhaps individually worse) to be moral? Can we shape peoples’ preferences, to make them like behaving morally? Is it possible, as Rousseau suggested, to inscribe the law, not in books, but on men’s hearts?

Readings:

Elinor Ostrom, "Collective Action and the Evolution of Social Norms," in Journal of Economic Perspectives Vol. 14, No. 3, (Summer 2000), 137–158

Robert Frank, Passions with Reason. (Chapters 1-5, e-reserve)

Martin Hollis, Trust within Reason. (Chapters 1-3, e-reserve)

Oct 29 and 31: Justice and Property?

Locke treats property as a natural right. And Hume seemed to think that justice was exclusively a matter of property rights. It emerges when property does, and does no more than govern our actions in regards our own and others property. How, we want to ask Locke, can he be so sure that there are natural frights in property? According to Hume such rights emerge spontaneously and suggest themselves to our self interest. Is there a good argument for this claim?

Hume, A Treatise of Human Nature, book 3 Sections 1-6.

Locke, Two Treatises, Book II, Chapters 1-5 (section 1-51)

Smith, Adam. On Primitive Accumulation, Wealth of Nations, Bk II, Introduction

Marx, Karl. Capital , Chapter 1 and Chapter 26

Rawls, Theory of Justice (Chapters 1 and 3) (e-reserve)

Nov. 3, 5, and 10: Justice and Equality

Two great problems of political philosophy have always been the question of what justice consists in, and why I should be just (especially when no one is looking). These are the two questions that absorbed Plato in The Republic. (Don’t worry; we won’t make you read it). Instead, let’s consider some classic views: Rousseau’s (for now) and later Locke’s and Rawls’. It will be evident that though some of us may endorse Rawls’ view, his conclusions certainly do not serve our interests. So why honor his claims? Shouldn’t we expect justice to be rationally defensible? This raises the question of what “rational defensibility” is. And on the economist or rational choice theorists’ definition of rationality, the answer is simple: acting justly is not rational. But the moral philosopher has no alternative definition that doesn’t simply beg the question. Or does he? (note on question begging).

Readings:

Rousseau, Discourse on Inequality

Demsetz, Harold, "A Theory of Property Rights," American Economic Review, May 1967

Gerald Gaus, On Philosophy, Politics and Economics, Chapter 3.

Hardin, Garrett, “Tragedy of the Commons”, Science, 1968

Skyrms, Evolution of the Social Contract, chapter 4

Nozick, Anarchy, State, and Utopia (Chapters 1-3 and 7-8) (e-reserve)

November 19: Game Theory in Political Science.

Collective Action, Collective Choice, and Spatial Competition

Readings: Olson, The Logic of Collective Action (excerpt, e-reserve)

Aldrich, Why Parties? (excerpt, e-reserve)

Hinich and Munger, Analytical Politics (excerpt, e-reserve)

November 24, and Dec 1: Social Choice and International Cooperation

Is there an answer to the problem of enforcement and moral action at the level of nations, rather than individuals? Can self-control, rather than deterrence, be the basis of peace? Or does self-interest and self-preservation dominate all other considerations?

Readings:

Hume, Of the Balance of Power

Gerald Gaus, On Philosophy, Politics and Economics, Chapters 5 and 6.

James Morrow, Alliances: Why Write Them Down? Annual Review of Political Science, Vol. 3. (Jun, 2000), pp. 63-83.

Harrison Wagner, The Theory of Games and the Balance of Power World Politics, Vol. 38, No. 4. (Jul, 1986), pp. 546-576.

Duncan Snidal, “Coordination versus Prisoners’ Dilemma: Implications for International Cooperation and Regimes,” American Political Science Review, 79 (4): 923–942 (December 1985).

Robert Jervis, “Cooperation under the Security Dilemma,” World Politics 30, (January 1978), pp.167–214

December 3: Last Class—Overview and Wrap-up

Exam for this class:

Friday, December 12 / 2:00 - 5:00 pm

Back to top of readings

A usage note: the phrase “begs the question” has a very specific meaning in philosophy. To say that “you are begging the question” does not mean that what you just said requires some other question be asked. Instead, it means that your claim assumes an unargued premise, or is circular. Any misuse of this phrase in this class will result in immediate public flogging.

Correct usage: “You can’t say that sweet vermouth is the embodiment of universal good just because you like it. You are begging the question.”

Incorrect usage: “Well, sure, once he was there he had to puke in the Japanese Prime Minister's lap. But that begs the question, ‘Why did he do all those sweet vermouth shots in the first place?’”