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What is special about the kitchen problem?

In this step we are summarising everything we have learned about our original kitchen problem.
Dirty dishes

The original kitchen problem we started this week with can be described by a payoff matrix presented below. We can use this payoff matrix to look at the problem from an individual and social point of view.

Individual rationality dictates what will happen if all players follow their best interest. We can draw a flow diagram and identify the equilibrium that will be reached in this scenario. It is easy to see that there is only one equilibrium in this game and it is the outcome in which nobody cleans and both players receive the payoff 2.

Social rationality describes which solutions make sense from the social point of view. Using the concept of Pareto optimality we can compare all the outcomes and eliminate those that are Pareto dominated. It is easy to see that in the kitchen game there is only one outcome that is Pareto dominated, because there is another solution that is better for both players. The dominated outcome is precisely the equilibrium, where nobody cleans and both players receive payoff 2. Had they both cleaned they would both get payoff 3 which is better.

The fundamental disagreement between individual and social rationality in the kitchen game is precisely what made this game famous (and known by the name of Prisoner’s Dilemma). It became an inspiration for many researchers who tried to understand how people behave in this type of situation and what can be done to help them achieve socially optimal solutions. The problem is particularly important when we realize that using shared resources on a bigger scale has a structure of Prisoner’s Dilemma.

Can you think of some examples of situations in which individual and social rationality are at odds?

If you are curious about other variations of the game, some applications and solutions that were inspired by the unique structure of prisoner’s dilemma you might check the nice overview given in the Stanford Encyclopaedia of Philosophy.

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Understanding Human Behaviour: Introduction to Game Theory and Shared Resources

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