Elinor Ostrum on "the Prisoner's Dilemma"
From Ostrum's Nobel Lecture, which is dense but fast-moving and well worth reading and study:
The classic assumptions about rational individuals facing a dichotomy of organizational forms and of goods hide the potentially productive efforts of individuals and groups to organize and solve social dilemmas such as the overharvesting of common-pool resources and the underprovision of local public goods. The classic models have been used to view those who are involved in a Prisoner’s Dilemma [PD] game or other social dilemmas as always trapped in the situation without capabilities to change the structure themselves. This analytical step was a retrogressive step in the theories used to analyze the human condition. Whether or not the individuals who are in a situation have capacities to transform the external variables affecting their own situation varies dramatically from one situation to the next. It is an empirical condition that varies from situation to situation rather than a logical universality. Public investigators purposely keep prisoners separated so they cannot communicate. The users of a common-pool resource are not so limited.
When analysts perceive the human beings they model as being trapped inside perverse situations, they then assume that other human beings external to those involved – scholars and public officials – are able to analyze the situation, ascertain why counterproductive outcomes are reached, and posit what changes in the rules-in-use will enable participants to improve outcomes. Then, external officials are expected to impose an optimal set of rules on those individuals involved. it is assumed that the momentum for change must come from outside the situation rather than from the self-reflection and creativity of those within a situation to restructure their own patterns of interaction.
So, whenever you hear an analyst or expert, especially an economist, invoke the Prisoner's Dilemma, you might ask yourself:
1) Whether the key assumption -- that game participants cannot communicate -- is realistic*, and
2) Whether the analyst or expert is personally invested in the "optimal set of rules" they will seek to impose on you (and people like you).
Indeed, considered in this light, "rationality" looks an awful lot like mere compliance.
Ostrum's Prisoner's Dilemma takedown -- at least in the realm of common pool resources -- is important because PD is so ubiquitous. [And, alas, I have to break off writing here, having simply asserted that ubiquity! --lambert]
NOTE * Hilariously, some German social scientists thought to actually -- quelle horreur -- test PD empirically, and PD breaks down, exactly where Ostrum identified its vulnerability:
For six decades, the classic cooperation test known as the prisoner’s dilemma has been a mainstay of graduate courses on game theory and behavioral economics, not to mention in Hollywood detective series.
Until recently, no one thought to test the game on actual prisoners.
A pair of German economists offered female prisoners a chance, and found they were more likely to act in cahoots than shaft the other prisoner, compared with female students in a control group, according to a study published in the August edition of the Journal of Economic Behavior & Oraganization.