## Quasi-magical thinking and the public good

May 12, 2013 12 Comments

Cooperation is a puzzle because it is not obvious why cooperation, which is good for the group, is so common, despite the fact that defection is often best for the individual. Though we tend to view this issue through the lens of the prisoner’s dilemma, Artem recently pointed me to a paper by Joanna Masel, a mathematical biologist at Stanford, focusing on the public goods game [1]. In this game, each player is given 20 tokens and chooses how many of these they wish to contribute to the common pool. Once players have made their decisions, the pool is multiplied by some factor *m* (where *mn > 1*) and the pool is distributed equally back to all players. To optimize the group’s payoff, players should take advantage of the pool’s multiplicative effects by contributing all of their tokens. However, because a player’s share does not depend on the size of their contribution, it is easy to see that this is not the best individual strategy (Nash equilibrium). By contributing nothing to the common pool, a player gets a share of the pool in addition to keeping all of the tokens they initially received. This conflict captures the puzzle of cooperation, which in this case is: Why do human participants routinely contribute about half of their funds, if never contributing is individually optimal?

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