Irrigated Rice Terrace Fields in Yuanyang County, Yunnan Province, China: Adobe Stock
Irrigated rice terrace fields in Yuanyang County, Yunnan Province, China.

Unit 4 Strategic interactions and social dilemmas

When social dilemmas arise from self-interested behaviour, a combination of social norms, a regard for the wellbeing of others, and appropriate institutions may lead to more desirable social outcomes

4.1 Climate negotiations: Conflicts and common interests

The scientific evidence is now overwhelming: climate change presents very serious global risks, and it demands an urgent global response.1

The Stern Review on the Economics of Climate Change, 2006

The Stern Review examined both scientific evidence and economic implications of climate change. Its conclusion, that the benefits of early action would outweigh the costs of neglecting the issue, was reinforced in 2014 by the United Nations Intergovernmental Panel on Climate Change (UN IPCC). Early action would mean a significant cut in greenhouse gas emissions, by reducing our consumption of energy-intensive goods, a switch to different energy technologies, reducing the impacts of agriculture and land-use change, and an improvement in the efficiency of current technologies.2

These changes could not happen under what the Stern Review called ‘business as usual’, in which people, governments, and businesses were free to pursue their own pleasures, politics, and profits, taking little account of their effects on others, including future generations.

This article describes the history of climate change negotiations over the last 30 years.

But national governments disagree on which policies to adopt, and who should bear the costs. Countries’ interests differ according to their stage of economic development, possession and use of natural resources, and vulnerability to the impacts of climate change. The 2015 Paris Agreement made progress: countries would adopt domestic mitigation measures to achieve ‘nationally determined contributions’ to emissions reduction, with the goal of limiting the temperature rise to 1.5°C by the end of the century and avoiding the worst impacts of climate change. But in October 2022, the UN warned:

We are still nowhere near the scale and pace of emission reductions required … To keep this goal alive, national governments need to strengthen their climate action plans now and implement them in the next eight years.

social dilemma
A situation in which actions taken independently by individuals in pursuit of their own private objectives result in an outcome that is inferior to some other feasible outcome that could have occurred if people had acted together, rather than as individuals.

The problem of climate change is extreme, but far from unique. It is an example of a social dilemma. Social dilemmas occur when people do not take adequate account of the effects of their actions on others, whether these are positive or negative.

Social dilemmas occur frequently in our lives. Traffic jams happen when our choice of a way to get around—for example driving alone to work rather than taking public transport, or car-pooling—ignores the contribution we make to congestion. Similarly, overusing antibiotics for minor illnesses may help a sick person recover quickly, but creates antibiotic-resistant bacteria that have a much more harmful effect on many others.

The Tragedy of the Commons

You can learn more about your carbon footprint and what you can do to reduce it here.

In 1968, Garrett Hardin, a biologist, published an article about social dilemmas in the journal Science, called ‘The Tragedy of the Commons’. He argued that resources like the earth’s atmosphere, or fish stocks, that are not owned by anyone (sometimes called ‘common property’ or ‘common-pool resources’) are easily overexploited unless we control access in some way. The fishing industry as a whole would be better off not catching as much tuna, and consumers as a whole would be better off not eating too much of it. Humanity would be better off emitting less pollution, but if you as an individual decide to cut your consumption or your carbon footprint, you will hardly affect the global levels.3

free rider, free riding, free ride
Someone who benefits from the contributions of others to some cooperative project without contributing themselves is said to be free riding, or to be a free rider.

Examples of Hardin’s tragedies and other smaller-scale social dilemmas are all around us: if you live with room-mates or in a family, you know just how difficult it is to keep a clean kitchen or bathroom. When one person cleans, everyone benefits, but it is hard work: whoever cleans up bears this cost. The others are sometimes called free-riders. If as a student you have ever done a group assignment, you understand that the costs of effort (to study the problem, gather evidence, or write up the results) are individual, yet the benefits (a better grade, higher class standing, or simply the admiration of classmates) go to the whole group.4

Resolving social dilemmas

We have been facing social dilemmas since prehistory.

Altruism is a social preference: a person who is willing to bear a cost to benefit somebody else is said to be altruistic.

More than 2,500 years ago, the Greek storyteller Aesop wrote about a social dilemma in his fable ‘Belling the Cat’. A group of mice needs one of its members to place a bell around a cat’s neck. Once the bell is on, the cat cannot catch and eat the other mice. But the outcome may not be so good for the mouse that takes the job.5 There are countless examples during wars or natural catastrophes in which individuals sacrifice their lives for others who are not family members, and may even be total strangers. These actions are termed altruistic.

Altruistic motivations can help to address social dilemmas—because our altruism means that we care about how our actions affect others—but for global challenges like climate change, altruism will not be sufficient: new government policies will have to be involved. Governments have successfully imposed quotas to prevent the overexploitation of stocks of cod in the North Atlantic. In the UK, the amount of waste that is dumped in landfills, rather than being recycled, has been dramatically reduced by a landfill tax.

Local communities also create institutions to regulate behaviour. Community irrigation systems need people to work to maintain the canals that benefit the whole community. Individuals also need to use scarce water sparingly so that other crops will flourish, although this will lead to smaller crops for themselves. For centuries in Valencia, Spain, farming communities have used a set of customary rules to regulate communal tasks and to avoid using too much water. Since the middle ages, they have had an arbitration court called the Tribunal de las Aguas (Water Court) that resolves conflicts between farmers about the application of the rules. The ruling of the tribunal is not legally enforceable. Its power comes only from the respect of the community, yet its decisions are almost universally followed.

Some present-day global environmental problems have also been tackled effectively. The Montreal Protocol has been remarkably successful. It is an international agreement to protect the ozone layer that protects us against harmful ultraviolet radiation, by phasing out chemicals like chlorofluorocarbons (CFCs) that deplete it.

social interactions
Situations in which the actions taken by each person affect other people’s outcomes as well as their own.

In this unit, we will use the tools of game theory to model social interactions, in which the decisions of individuals affect other people as well as themselves. We will examine when and why social dilemmas arise, and how people can sometimes solve them—but not always (or not yet), as in the case of climate change.

Exercise 4.1 Social dilemmas

Using the news headlines from last week:

  1. Identify two social dilemmas that have been reported (try to use examples not discussed above).
  2. For each, specify how it satisfies the definition of a social dilemma.
  1. Nicholas Stern. 2007. The Economics of Climate Change: The Stern Review. Cambridge: Cambridge University Press. Read the executive summary

  2. IPCC. 2014. ‘Climate Change 2014: Synthesis Report’. Contribution of Working Groups I, II, and III to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change. Geneva, Switzerland: IPCC. 

  3. Garrett Hardin. 1968. ‘The Tragedy of the Commons’. Science 162 (3859): pp. 1243–1248. 

  4. Elinor Ostrom. 2008. ‘The Challenge of Common-Pool Resources’. Environment: Science and Policy for Sustainable Development 50 (4): pp. 8–21. 

  5. Aesop. (1909–14) 2001. ‘Belling the Cat’. In Fables, retold by Joseph Jacobs. XVII, (1). The Harvard Classics. New York: P. F. Collier & Son;