Equality, Participation, Transition: Essays in Honour of Branko Horvat

Samuel Bowles and Herbert Gintis 39
in which levels of defection are high, tit-for-tat spontaneously emerges
as an individually successful strategy that leads to a very high level of
cooperation. In a highly cooperative society, however, the attractive
features of tit-for-tat disappear, and there is a movement towards
unconditional cooperation (altruism) that in turn invites high levels of
defection and non-cooperative behaviour.
What does this have to do with people? There have been many
experiments with human subjects involving the iterated prisoner’s
dilemma. If Axelrod’s tournaments showed that nice guys finish first,
the experiments reveal that there are lots of nice guys, even among the
economics majors who show up for experimental games. Among the
most revealing of these experiments are those that use the ‘public
goods game’, designed to illuminate such problems as the voluntary
payment of taxes and the restriction of one’s use of an endangered
environmental resource. The following is a common variant. Ten subjects
are told that $l.00 will be deposited in each of their ‘private
accounts’ as a reward for participating in each round of the experiment.
For every dollar they move from their ‘private account’ to a
‘public account’, the experimenter will deposit 1/2 dollar in the private
accounts of each of the subjects. This process will be repeated ten
times, and at the end, the subjects can take home whatever they have
in their private accounts.
In this public goods game, if all ten subjects are perfectly cooperative,
each will put this $l.00 in the public account, and having received
$10 in the public account, the experimenter will put $5.00 in the private
account of each subject on each round, for a total of $50.00 per
subject after ten rounds. But if a subject is perfectly selfish, he will keep
all of his money in his private account, so if the other nine subjects
remain perfectly cooperative, he will end up with $55.00 at the end of
the game, and the other players will end up with $45.00 each. If all players
are perfectly selfish, each will end up with $10.00 at the end of the
game. It is thus clear that this is indeed an iterated prisoner’s dilemma,
since whatever anyone else does on a particular round, a player’s highest
payoff comes from contributing nothing to the public account, but if
all do this, all receive less than they would had all cooperated.
Public goods experiments of this type have been run literally hundreds
of times, under varying conditions, since the pioneering work of
the sociologist G. Marwell, the psychologist R. Dawes, the political scientist
J. Orbell, and the economists R. Isaac and J. Walker in the late
1970s and early 1980s. 10 We may summarize this research as follows.
Only a fraction of subjects conform to the Homo economicus model,