SOCIETY'S EFFORTS TO CORRECT THE PARADOX

Recognizing the inequities displayed by the VP and the cost to society, efforts are made by the leaders of society to change the balance sheet for the perpetrators of uncooperative actions. This is done in several wellknown ways.

Some Popular Methods of Minimizing the Social Dilemmas

• Religion:

  Individuals are taught that God is watching at all times so that the cost remains high at all tims for committing a transgression. In effect God is made the all seeing cop. Further, God will reward when you do a good deed so that you are encouraged to do a good deed even if there is no way any human will ever know about it.

• Morals:

  Even without God watching, many in society can be convinced that there is a "moral" aspect to every action and doing "immoral" things are "wrong". Of course this is a significant part of any cost/reward balance sheet for anyone convinced of these concepts. Unfortunately for society, the expeced cost and return based on "morals" varies greatly with individuals.

• Laws:

  Laws can be and are very effective in changing the balance sheet to improve the consideration for the group in any individual's actions. Generally, laws only provide punishments, not rewards, so that the cost of any action is increased by the threat of punishment for those actions perceived to be detrimental to society.

• Probabilistic Results

  In nearly all of the actions we take daily in live, the expected costs and the results are not known with absolute certainty. There may only be a probability that the result will happen and the amount (or other characteristics of the result) may only be described with probability.

  The action of paying taxes provides a good example.

  When we pay taxes, the "member of group" return is not likely to compensate for the cost to the individual. So we would prefer to minimize the amount we pay. Unfortunately, the cost of not paying taxes can be substantial.

  There is a probability that we may get caught if we decide to not report some income. This can be logically incorporated in our cost model by taking the cost of being caught and multiplying it by the probability of being caught. This is the expected cost.

  Of course, humans can only estimate these factors and in practise, they do a very poor job.^[1] Since we are only concerned about the effective estimated cost, the accuracy is not all that important to us here.

  To estimate the cost a person would have to know the actual cost as well as the probability, neither of which is generally known with much certainty. For this particular example, getting caught would result in going through and extensive legal process with very uncertain results and expenses. The probability of getting caught is very uncertain, of course.

  Nevertheless, the human must form some idea of the expected cost in his mind before he decides to cheat or not cheat. Most of us assume that the expected cost far exceeds the return and forget the whole thing.

  On the other hand, the expected costs to a young kid in the mean streets of Los Angeles pondering a mugging may be much lower than we would like to think. The expectation of being caught and prosecuted is quite low and the cost is not much either. So the return exceeds the cost and the crime is committed.

Notes:

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