# ON THE EVOLUTION OF DISCRIMINATION, COOPERATION, AND PERCEPTIONS OF ENTITLEMENT YANIS VAROUFAKIS PHD COLLOQUIUM LBJ SCHOOL OF PUBLIC AFFAIS SPRING 2014.

## Presentation on theme: "ON THE EVOLUTION OF DISCRIMINATION, COOPERATION, AND PERCEPTIONS OF ENTITLEMENT YANIS VAROUFAKIS PHD COLLOQUIUM LBJ SCHOOL OF PUBLIC AFFAIS SPRING 2014."— Presentation transcript:

ON THE EVOLUTION OF DISCRIMINATION, COOPERATION, AND PERCEPTIONS OF ENTITLEMENT YANIS VAROUFAKIS PHD COLLOQUIUM LBJ SCHOOL OF PUBLIC AFFAIS SPRING 2014 LESSONS FROM A LABORATORY EXPERIMENT

THE HAWK-DOVE GAME Hawk – Hawk (Conflict) = loss of \$2 per subject Dove – Dove (Mutual Flight)= gain of \$1 per subject Hawk – Dove (Distribution) = gain of \$2 for thehawk and a zero payoff for the dove

THE STANDARD ANALYSIS Theorem: In equilibrium, subjects will play HAWK 1/3 of the time Proof: Let p be the probability/frequency of HAWK play. Then the expected returns (ER) from HAWK and DOVE are, respectively: ER(HAWK) = p (-2) + (1-p) (2) = 2 – 4p ER(DOVE) = p 0 + (1-p) 1 = 1 – p In equilibrium, it is impossible to know! Hence ER(HAWK) = ER(DOVE) But then: p = 1/3 QED

ALFRED MARSHALL, PRINCIPLES OF ECONOMICS, 1890, XIV The Mecca of the economist lies in economic biology rather than mechanical economic dynamics… Rationality stumped The problem with indeterminacy (multiple equilibria) A false dilemma: Rationality or evolving conventions?

Enter Evolutionary Game Theory d = Net Gains to Hawks = ER(HAWK) – ER(DOVE) = = 2 – 4p – (1-p) = 1 – 3p Adaptation Mechanism: d > 0 p or p< 1/3 p p> 1/3 p ONE DIMENSIONAL EVOLUTION

TWO DIMENSIONAL EVOLUTION THEOREM: In equilibrium, all players of the same colour will either play HAWK or DOVE (while players of the other colour will play the opposite strategy) PROOF: Let p = Pr(BLUE plays HAWK) and q = Pr(RED plays HAWK) ER B (HAWK) = q (-2) + (1-q) (2) = 2 – 4q and ER B (DOVE) = q 0 + (1-q) 1 = 1 – q d B = -1 + 3q. So, d B >0 p or q< 1/3 p Similarly, ER R (HAWK) = 2 – 4p, ER R (DOVE) = 1 – p d R = -1 + 3p d R = -1 + 3p. So, d R >0 q or p< 1/3 q Two Dimensional Adaptation Mechanism: q 1/3 p p 1/3 q

TWO DIMENSIONAL EVOLUTION JOHN MAYNARD SMITH, GEORGE PRICE, RICHARD DAWKINS THEOREM: In equilibrium, all players of the same colour will either play HAWK or DOVE (while players of the other colour will play the opposite strategy) q 1/3 p p 1/3 q p=proportion of blue hawks q = proportion of red hawks 0 1/3 1 1 1/3 Two evolutionary equilibria

THE PROMISE OF EVOLUTIONARY GAME THEORY Escape from conventional theory s Abuse of Reason Evolutionary accounts of institutions, conventions and norms Extraneous characteristics can seed conventions which advantage one type of individual relative to another (even if the difference across individuals is arbitrary), and The resulting conventional discrimination is evolutionarily stable and, thus, tends to be institutionalised

AN EXPERIMENT (HARGREAVES-HEAP AND VAROUFAKIS, THE ECONOMIC JOURNAL, 2002) 645 EXPERIMENTAL SUBJECTS CONTROLLED ENVIRONMENT COMPUTERISED, ANONYMOUS, SIGHTLESS PLAY

EXAMPLE OF THE SCREEN SUBJECTS FACED PLEASE: Predict the choice that the player you have just been randomly matched with will make in this round. [Recall that if you predict correctly, you will win, in addition to your money payoffs from this round, a lottery ticket. At the end of the session, \$10 will be given to the player with the lucky ticket. The more lottery tickets you collect the greater the chances of winning the \$10.] Punch in number 1 if you think that she/he will choose strategy 1, or 2 if you think that she will choose strategy 2. NOW CHOOSE YOUR OWN STRATEGY: Punch in number 1 if you wish to select strategy 1, or 2 if you prefer strategy 2.

THE DISCRIMINATION HYPOTHESIS BLUE and RED labels will give rise to patterned, discriminatory outcomes NULL HYPOTHESIS (supported by the standard analysis and one-dimensional evolution): Colour labels will not influence behaviour ALTERNATIVE HYPOTHESIS (supported by two-dimensional evolution): Players will, eventually, make use of the extraneous information of colour labels to build a discriminatory convention

The Hawk-Dove-Cooperate Game Nb. Co-operative outcome cc superior to any of the two equilibria but not an equilibrium in its own right AFTER 32 ROUNDS OF THIS GAME A THIRD STRATEGY WAS MADE AVAILABLE. THEN THE GAME WAS REPEATED FOR ANOTHER 32 ROUNDS. The Twist!

STANDARD AND EVOLUTIONARY THEORYS PREDICTIONS Standard Analysis: The two games will elicit identical behaviour among rational players. Learning will kill off the cooperative strategy, as players learn to play rationally. Evolutionary Analysis: Cooperative behaviour will fade out independently of the availability or otherwise of colour labels. My hypothesis: THE SEQUENCE HYPOTHESIS The availability of the cooperative option at the outset makes a difference to the evolution of discrimination. Order of play matters. Null Hypothesis: It makes no difference whether HD is played first, followed by HDC, or vice versa. COOPERATION DOOMED? IRRELEVANT?

THE 32 SESSIONS TreatmentNo. of sessionsNo. of playersInteractions per game HD-HDC-NClr4881408 HDC-HD-NClr4761216 HD-HDC-Clr163305280 HDC-HD-Clr81462336 Total3264010240

AGGREGATE BEHAVIOUR GameHDHDC Outcomes(h,h) Conflict (h,d) Asym. Distr. (d,d) Flight (h,h) Conflic t (h,d) Asym. Distr. (d,d) Flight (c,c) Coo p (h,c)(d,c) Treatment 11.11% 44.4% 11.11% 44.4% 0 0 0 HD-HDC-NClr2939.831.236.79.83.7630.213.6 HDC-HD-NClr3335.631.429.34.328.238.118.1 HD-HDC-Clr21.451.826.819.238.72.29.32010.6 HDC-HD-Clr26.945.227.930.17.12.17.234.718.8

1 ST RESULT: DISCRIMINATION GALORE (IN THE COLOUR TREATMENTS)! Session no. and colour treatment Game HD Game HDC Convergence?Which Colour? Which Round? Convergence?Which colour? Which Round? 9HDC-HDYesRed26No-- 10HD-HDCYesRed24YesRed12 11HD-HDCYesBlue19YesBlue8 12HD-HDCYesBlue18YesBlue5 13HDC-HDYesBlue1YesBlue26 14HDC-HDYesRed24No-- 15HD-HDCYesRed21YesRed11 16HD-HDCYesBlue20YesBlue2 17HDC-HDYesRed23No-- 18HDC-HDNo-- -- 19HD-HDCYesBlue15YesBlue8 20HD-HDCYesBlue20YesBlue6 21HDC-HDNo-- -- 22HD-HDCYesRed14YesRed13 23HD-HDCYesBlue16YesBlue1 24HD-HDCYesRed YesRed2 25HD-HDCYesBlue10YesBlue20 26HDC-HDNo-- -- 27HD-HDCYesRed20YesRed21 28HD-HDCYesRed7YesRed6 29HDC-HDNo-- -- 30HD-HDCYesBlue18YesBlue7 31HD-HDCNo-- -- 32HD-HDCYesBlue16YesBlue10

GAME HD - TREATMENT HD-HDC DATA FROM AA, AD, DD PAIRINGS LAST 11 ROUNDS OF 32 DISTINCT PATTERNS OF DISCRIMINATION, AGGRESSION AND ACQUIESCENCE Remarkable acquiescence amongst the Disadvantaged Exorbitant aggression amongst the Advantaged Substantial coordination in cross colour meetings

The HDC Game Last 11 rounds in the HD-HDC Treatment A QUITE REMARKABLE RESULT MOTIVATED COOPERATION AMONG THE DISADVANTAGED SOCIALLY CONTINGENT TRUST THE EMERGENCE OF CONVENTIONS OF FAIRNESS, INTERTWINED WITH EVOLVED DISCRIMINATION

BUT IS IT RATIONAL? Game HDGame HDC A-playersD-playersA-playersD-players Meetings between an A and a D player 66.321.7137.839.7 Meetings between two A players 7.3-16.2- Meetings between two D players -19.6-101.3 Average36.820.77770.5 Average payoffs per round of A-players and D-players in all 32 rounds of HD and HDC in treatment HD-HDC-Colour

WHY DID CO-OPERATION OCCUR AMONG THE DISADVANTAGED? Nash Equilibrium: A set of strategies, one per player, that confirm the 1 st order expectations of each. 2 nd order expectations: That which Jill expects that Jack expects she will do. Psychological Equilibrium : A set of strategies that confirm both 1 st and 2 nd order expectations of each player Fairness Equilbrium: A psychological equilibrium consistent with particular perceptions of entitlement MY HYPOTHESIS: A-players develop higher normative expectations regarding what they are entitled too when pitted against D-players. But D-players develop similarly heightened perceptions of entitlement when playing with other D-players Thus, (c,c) is a fairness equilibrium for D-players but not for A-players. A-players with higher normative expectations may find themselves locked into a nasty (unkind) fairness equilibrium with players of the same colour.

THE GIST: EXPERIMENTAL FINDINGS SUMMARISED AND INTERPRETED MORE BROADLY 1.The observed distribution of social power, income, roles etc. may be predicated upon arbitrarydifferences (i.e. differences that have nothing to do with human capital, aptitude, application etc.) 2.Once a pattern of dominance is established in simple accumulative contests (HD), it colonises the ensuing, more complex social interactions (e.g. HDC). 3.Patterned discrimination (e.g. along the lines of class, gender, race) determines the likelihood of cooperation between and across different groups 4.Such power patterns are maintained through bonds of trust between the powerless. Moral legitimation ensues, as both the advantaged and the disadvantaged, develop their separate, but intertwined, ideologies (e.g. the former focusing on competition and efficiency, the latter on justice and the virtues of co-operation) 5.Hierarchies are institutionalised in response to the structure of the interaction, rather than as a reflection of the distribution of the attributes, features and talents of the individuals.

EPILOGUE: NOTHING NEW, REALLY… The weaker are always anxious for justice and equality. The strong pay heed to neither. Nietzsche, Beyond Good and Evil …there is master morality and slave morality…those qualities which serve to make easier the existence of the suffering will be brought into prominence and flooded with light… Slave morality is the morality of utility. Aristotle, Politics, s1318b

Thucydides, History of the Peloponnesian War, Book 5, s90 Athenian General: …on the one hand the principles of justice, as encompassed in human reason, hinge on the equal capacity to compel, yet on the other hand, the strong actually do what is possible and the weak suffer what they must. Melians: …you should not destroy a principle that is in the general good – namely that those who find themselves in the clutches of misfortune should be justly and properly treated, and should be allowed to thrive beyond the limits set by the precise calculation of their power. If not, your own fall will be visited by the most terrible vengeance, watched by the whole world. EPILOGUE: NOTHING NEW, REALLY… Force cannot, like opinion, endure for long unless the tyrant extends his empire far enough afield to hide from the people, whom he divides and rules, the secret being that real power lies not with the oppressors but the oppressed. Marie Jean Antoine Nicolas de Caritat, marquis de Condorcet (1743-1794),

THE END

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