Leaf-blowers and Stadium Seating: Group vs. Individual Rationality

[The_Q]

Every weekend in autumn, my neighborhood has a wonderful ritual every pater familius partakes in. In the morning, they all go out with their leaf-blowers and spend a tiresome hour or two blowing leaves into each others yards, never actually sending them anywhere or cleaning up their own yards.

Wouldn't it be common sense to just go inside and all watch football? It'd save hours of work, the same amount of productivity would get done and everyone would benefit. So why don't we do it? Because we, as individual homeowners (and yardworkers, boludo), don't function as a group rationality. We see things as a single person. We either don't trust the neighbors to cut it out or think "I can make my yard the best on the street!" Either way, we end up pushing the costs onto the neighbors by avoiding football and blowing leaves instead.

Let's take a look at something you might have experienced for yourself. You're at the ballpark, you've just got your nachos, hot dog (if it's a Friday), soda or whatever from the concession stand. That's not the economics we're worried about right now. We're worried about an in the park home run. You just sit down, set your food to the side and look up. There's the crack of a bat, the batter starts running and you stand up to get a better look over the sea of heads in front of them. But you can't. Everyone else stood, too. They also wanted to see what was so interesting and see it well, so they all stood, too. You could have all saved yourselves the standing and just remained seated but, again, you're all thinking the same thing. "If I stand, I can see better," or, "if they stand and I don't, I'll see worse." Since the major cost of standing isn't on you, but the person behind you, you only see the benefit of standing.

This tends to be the case. In things that people feel the costs of, they tend to behave more conservatively (buying groceries, for instance). When costs have spillover effects, or as economists call them "negative externalities", people have a tendency to throw caution to the wind because they have no idea what harm they're causing.

PS- coberst

Q

[devonin]

Erm...that's interesting, and you are correct in your assessment of the situation but uh...is there actually a question or topic for discussion in there?

[Kilroy_x]

Yes there is, the prevalence and applicability of these types of scenarios happens to be one of the principle issues behind contentions between Capitalist and Socialist conceptions. The discussion could range from purely Philosophical implications to the ideal place for government, and that's just a way of building on top of the issue. Investigating the causality of the issue would be a much greater work, and would delve into both Philosophy and Biology, easily among other subjects.

[devonin]

Well, if he'd said any of that, we could be discussing it right now, instead of talking about whether there's anything to discuss *grin*

[Kilroy_x]

Yeah. Well then, is there anything in that list of potential discussions you're up for? I could go for any of them.

[devonin]

Well, I'm curious what you think are the root causes of the "me-first" behavior exhibited in the baseball example. I mean, you see it -everywhere- people pushing and shoving in line when an orderly line would actually move faster, and so on.

Part of me wants to think it is a throwback to when pretty much all aspects of life were competeing for quite limited resources, and you really see it in action during sales at stores etc.

When your concern is for your own benefit, you tend not to especially consider the effect of that action on other people. Sure you get a better view if you stand up and people behind you don't, but everyone behind -you- has someone in their way, which is what starts the cascade of everyone standing up.

It is an argument that people are inherently capitalistic, but I'd debate whether the situation arises because people are capitalistic by nature, or whether people become capitalistic by nature because the situation keeps arising where it is advantageous to be so.

Or more to the point, if you no longer -needed- to stand up to get a better view than others, would you still instinctively do it anyway?

[Master_of_the_Faster]

Honestly, I believe everyone is greedy in their own way. You love someone because you maybe believe they will love you back. You get money just for yourself. This may be a bit crazy but I believe that even the greatest people are greedy in a certain way. A person helps others because it makes themselves feel good. Can't this be considered greedy or at least a little? I know it's really nice, but shouldn't there be a pinch of greed in this?

[devonin]

It is one thing to think that maybe there is, and quite another to think that maybe there should be...

At the end there it sounded like you were advocating acting from a standpoint of greed and personal benefit. Was that just a side-effect of word-choice or do you believe that?

[Kilroy_x]

Well, it looks like this topic is quickly getting overbalanced and might tip over, so I think it's important I introduce some new language and terminology and we work towards using common definitions in general.

Capitalism: The notion that capital is in some way the essential component of human interaction

Free Market capitalism: The notion that exchanges in capital should only occur by means of voluntary cooperation

Socialism: A belief that third party controls and restrictions of capital interactions can result in greater benefit for a greater number

Dialectic Materialism: A perspective of human interaction which attempts to reduce all human conflict down to problems in how capital is exchanged or otherwise employed.

Invisible Hand: The name given by economist Adam Smith to the observable way in which selfish actions taken by individual parties result in benefit for all parties.

Ok, moving on to specific posts.

[Kilroy_x]

Originally Posted by devonin

Part of me wants to think it is a throwback to when pretty much all aspects of life were competeing for quite limited resources, and you really see it in action during sales at stores etc.

That part of you might be on to something, although sales at stores don't generally strike me as demonstrating the problem of the main topic.

When your concern is for your own benefit, you tend not to especially consider the effect of that action on other people. Sure you get a better view if you stand up and people behind you don't, but everyone behind -you- has someone in their way, which is what starts the cascade of everyone standing up.

This may have some truth to it, however conventional classic and modern economics show that selfish behavior generally doesn't have spillover effects, and in the cases where it doesn't the tendency towards selfish behavior maximizes desire satisfaction. The need to plan in any grand way is frequently non-existent, or if it does exist planning occurs very organically within voluntary systems. It's hypothetically possible that everyone in the stadium could get a better look if the people in the back stood up first, for instance, and then the rows of people standing up moved forward, although this example is quite silly as it would be infinitely easier and more likely for a better stadium to be built and steal customers from the other one. Or a number of other solutions would be possible.

It is an argument that people are inherently capitalistic, but I'd debate whether the situation arises because people are capitalistic by nature, or whether people become capitalistic by nature because the situation keeps arising where it is advantageous to be so.

That's a good question. In terms of long scales, the evolving nature of life might mean the answer to your question is that this nature arose, but it was also probably inherent in life to begin with, simply being refined and manifesting in more complex fashions as human beings are more complex creatures. However, the important distinction to make that your instinct in this case doesn't seem to be capturing is the distinction between free market capitalism and the purely capitalist instinct. The purely capitalist instinct generally manifests strongest in socialist environments. This is because systems designed to prevent market spillovers usually have third party costs themselves, meaning that even in cases where intentions might be good, the cost of an action is made twice or more what it would normally be. An easy example, aid for the poor. The poverty line makes it so extremely poor people don't have to pay taxes, while taxes taken from above the poverty line pay for welfare, foodstamps, etc. What happens to upwards mobility as a result of this? Well, there's now a very heavy cost associated with accumulating wealth past the poverty line, effectively punishing people for trying to help themselves. So trying to prevent selfishness and redistribute wealth doesn't work in this instance, because it also harms the potential for the poor to help themselves which is ingrained in their own sense of selfishness. Even worse, the amount of aid the poor actually get is less than it should be do to costs involved in redistribution: government salaries, etc.

Or more to the point, if you no longer -needed- to stand up to get a better view than others, would you still instinctively do it anyway?

You might. Desire is ultimately quite arbitrary, but it's precisely this arbitrary nature which makes the free market a perfect scale for balancing desire/satisfaction amongst all participants. You can't remove need or want just by making them cost more, this only ensures that those who can afford to pay more will do so while everyone loses utility (like putting in footstools to solve the stadium problem. Everyone still blocks everyone else's view, the footstools cost money, which means tickets cost more, and tall people retain an advantage but just like everyone else they pay more money for what in at least this instance is the same thing. In real life situations people frequently lose both independent quality of goods or services as well as quality of goods or services relative to cost.)

[Kilroy_x]

Originally Posted by Master_of_the_Faster

Honestly, I believe everyone is greedy in their own way. You love someone because you maybe believe they will love you back. You get money just for yourself. This may be a bit crazy but I believe that even the greatest people are greedy in a certain way. A person helps others because it makes themselves feel good. Can't this be considered greedy or at least a little? I know it's really nice, but shouldn't there be a pinch of greed in this?

There probably is. Altruism has been explained as a biological adaptation to expected reciprocation based on the fact reciprocation occurs often enough and over long enough time periods for the behavior to become ingrained in a population. As to the question of whether or not selfishness should be involved in such things, when selfishness doesn't hurt anyone there's no reason for it not to be, especially when selfishness is the only or most efficient/effective way to ensure maximum benefit for maximum parties. The invisible hand of economics, although being a very flowery and poetic term, applies to very real, observable phenomenon. Letting said hand do what it does by way of selfishness is in virtually all circumstances the best way to maximize utility.

[aperson]

Originally Posted by The_Q

Let's take a look at something you might have experienced for yourself. You're at the ballpark, you've just got your nachos, hot dog (if it's a Friday), soda or whatever from the concession stand. That's not the economics we're worried about right now. We're worried about an in the park home run. You just sit down, set your food to the side and look up. There's the crack of a bat, the batter starts running and you stand up to get a better look over the sea of heads in front of them. But you can't. Everyone else stood, too. They also wanted to see what was so interesting and see it well, so they all stood, too. You could have all saved yourselves the standing and just remained seated but, again, you're all thinking the same thing. "If I stand, I can see better," or, "if they stand and I don't, I'll see worse." Since the major cost of standing isn't on you, but the person behind you, you only see the benefit of standing.

Wait how long have you been studying economics? This is the most basic game theory crap imaginable; it's essentially a prisoner's dilemma network. Everyone stands because standing is the dominant strategy. The reason everyone isn't standing all the time is because they play something close to the evolutionarily stable strategy of tit for tat, i.e. do what everyone else did on the last round on the next round. So if no one is standing, everything is fine and dandy, but because playing the stand-up strategy dominates the sitting strategy once one person stands that habit will permeate through the whole network until everyone decides that they get more utility from sitting down and resting than from watching whatever is going on.

Of course the fundamental assumption of game theory is that every individual plays to maximize their own utility without regard for everyone else. If you want to force an ESS that allows everyone to be societally utility-maximizing then you're going to have to have some higher force governing the game rules. If you read back through a microeconomics textbook, that the area of externalities is one of the few sections where government intervention is required to maximize utility. It's the same principle here.

[Kilroy_x]

Originally Posted by aperson

Of course the fundamental assumption of game theory is that every individual plays to maximize their own utility without regard for everyone else. If you want to force an ESS that allows everyone to be societally utility-maximizing then you're going to have to have some higher force governing the game rules.

This is an equivocation. There's no difference between "all individuals" and "society", except that "all individuals" is the more descriptive and therefore superior label. There's also no reason a behavior which is designed to benefit only others can't be described in terms of individual preference, meaning selfishness remains a coherent framework for addressing even that part of utility distribution, even though "greed" ceases to become synonymous with "selfishness" when the word is used in that context.

If you read back through a microeconomics textbook, that the area of externalities is one of the few sections where government intervention is required to maximize utility. It's the same principle here.

That's nonsense. First of all there are plenty of economists who believe externalities are negligible to begin with, but more than that the cost of government intervention often, perhaps even always exceeds any utility gain which it could confer.

[Kit-]

Originally Posted by Kilroy_x

This is an equivocation. There's no difference between "all individuals" and "society", except that "all individuals" is the more descriptive and therefore superior label.

"Every individual" refers to many individually functioning units, whereas society is the cohesive group formed by these individuals. The stadium situation has only one Nash equilibrium, because no matter what happens, each person can improve his/her payoff by standing up. If the goal was to maximize societal payoff, then people standing up would take into account the negative impact on other members.

[Kilroy_x]

Originally Posted by Kit-

"Every individual" refers to many individually functioning units, whereas society is the cohesive group formed by these individuals.

What is the meaning of the group independently of the individuals? There is none. Society can't be substantiated past its components. Society is a function of every individual.

The stadium situation has only one Nash equilibrium, because no matter what happens, each person can improve his/her payoff by standing up. If the goal was to maximize societal payoff, then people standing up would take into account the negative impact on other members.

Actually the problem seems to be that there is a cost imposed on the person to the rear by any given person standing up, to which standing only equalizes to an equivalence to the original state, while imposing the cost of standing. In terms of "all individuals", the actions of any given individual apply to any other given individual or group of individuals. There is no "society". Adoption of a group mentality stands to be beneficial either by preventing standing altogether, which reduces the cost imposed, or by leading to some other strategy which may or may not exist. Either way, there's no specific need for central planning. Another important question in terms of practical real world situations is whether the cost of adopting central planning outweighs the removal of the cost in question, or whether the cost imposed by a person's standing should be considered as a transgression at all.

[Kit-]

Originally Posted by Kilroy_x

What is the meaning of the group independently of the individuals? There is none. Society can't be substantiated past its components. Society is a function of every individual.

Which is where the misunderstanding lies. When I say "every individual," I refer to each and every separate individual, rather than the collection of individual persons. Every individual cares only about his/her payoff, not the payoff of every other individual person or the collective society as a whole.

[Kilroy_x]

Yet there are only two options, everyone wins or everyone loses. An individual acting rationally in their best interest would also be acting perfectly in the interest of every other individual.

[Kit-]

If the person in front of you is sitting, you get up. You now have an amazing view.
If the person in front of you is standing, you get up. You can now see.
No matter what, standing up is going to increase your payoff in the immediate future.

[Kilroy_x]

In that case, what's the problem at all? There doesn't seem to be any serious or long term loss of utility.

[aperson]

Originally Posted by Kilroy_x

In that case, what's the problem at all? There doesn't seem to be any serious or long term loss of utility.

Okay I've got an idea, stop responding to kit or me until you've read some basic game theory.

            Sit           Stand
Sit 	    3, 3 	  0, 5
Stand 	    5, 0          1, 1

1 1 is the dominant strategy
3 3 is the societal maximum