The COVID-19 spell has left governments, markets, and civil society wobbling through disruptions and damage. The ambiguity that envelops not only the evolution of the disease but also its impact makes it a challenging and complex task for policymakers to devise a suitable policy response.
The pandemic has brought to the forefront some key ethical questions that we must explore. The ‘Human gene’ is thought of as the most skilled of making a choice based on ‘free will’, on ‘reason’ and ‘rationality’. From the study of human behavior, it is widely known that the current setting can be related to the behavior of people, the choices they make, and the human tendency for cognitive error, to be able to forecast patterns and design effective interventions.
Today, the whole world stands on the edge, geopolitics at a cusp, policymakers in a dilemma, to generate an appropriate policy response. This is the classic case for strategic thinking and can, therefore, draw on insights from behavioral economics and game theory. The former is a field of social sciences that is a blend of economics and psychology and looks into human decision-making behaviors, whereas the latter is the study of models based on strategic interactions between players, on rational choice and on maximizing behavior by the people.
In the context of the pandemic, the questions that come to one’s mind are:
- How to encourage – and sustain – cooperation?
- How to incentivize social distancing amongst people?
- How to get various organizations and authorities to better coordinate?
- How to get countries to cooperate and coordinate?
Game theory is the science of strategy that deals with outcomes that are produced by interactions, based on the behavior of the players. It is a tool to study interactions in the context of interdependencies.
A “game” is any situation involving two or more “players” in which the “fate” of each player depends not only on her “actions” but also on the actions of the other players. Some notable points are:
- A “situation” can be economic, social or political, etc. (e.g., social distancing).
- A “player” can be a person or a group such as a firm, a political party, a country, etc. (e.g., a citizen).
- The “fate” of a player is what she cares about such as profit, happiness, winning an election, growth, money, pay-offs, etc. (e.g., catch the virus or not, and keep one’s job or not).
- An “action” is a choice or a strategy. (e.g., to social distance or not).
The main ingredients of a Game:
- Who are the players?
- What strategies does each player have
- What are the payoffs for each player?
The novel Covid-19 pandemic seems like a real-time situation that can be fitted well into the basic game theory model called the ‘Prisoner’s Dilemma’. The prisoner’s dilemma is basically a game in which there is an incentive to make a choice that may not produce the best possible or optimal outcome for the group as a whole.
Some aspects of this pandemic reflect the same premise, such as the decision to maintain social distancing during a pandemic looks a lot like a move in a multiplayer form of this game. One can either cooperate, and do something that costs a little while helping those around, or deviate, and bring one, a small benefit but at a greater cost to those around oneself.
If one maintains social distancing, it is not necessary that he/she will not contract the virus as it also depends on what others are doing. Thus, it is a ‘game’-there are strategic interactions.
Let us say, we have a two-player Prisoner’s dilemma game. Both players ‘A’ and ‘B’ have two choices. Choice ‘C’, in which both choose to maintain social distancing and hence cooperate and, choice ‘D’, where they both deflect and do not social distance. The payoff matrix is given below:
|
Player B
|
|
Player A
|
Strategies |
C |
D |
| C |
5,5 (C, C) |
0,8 (C, D) |
| D |
8,0 (D, C) |
1,1 (D, D) |
The efficient outcome is (C, C) with respective payoffs (5,5). This occurs when they both agree to cooperate and maintain social distancing. This is the result of ‘Collective rationality’. The outcome “(5,5)” is preferred by both (everyone) but is unstable in that each person has an “incentive to cheat” – there is a temptation to go out when everyone is locked inside their respective homes. However, here both the players have a unilateral incentive to deflect and this outcome becomes unstable and fragile. Each player becomes vulnerable to the so-called ‘selfish gene’ inside of him and has an urge to cheat and deviate and thus get a higher payoff for oneself. If ‘A’ falls prey to this temptation, thinking that ‘B’ would have done the same and drops the precaution of social distancing, then he gets a small benefit (8,0) but at the cost to others in the society. If player ‘B’ is led off by the temptation to deviate assuming that ‘A’ would have reacted in the same way and decides not to distance himself, then likewise his payoff is (0,8).
Thus, the Unique “dominant” (or “rational”) strategy for each person is ‘Not to Cooperate’. There arises a tension between “Individual Rationality” and “Collective Rationality”. Individual Rationality leads them to settle at the ‘optimal’ outcome, where both them end up in deviating with lower payoffs for themselves at (1,1) and a higher risk of getting the virus. This in fact is what is called the ‘Nash equilibrium’. Cooperation gets destroyed by the ‘Art of War’ and paradoxically non-cooperation becomes the dominant strategy.
Ironically, the biggest debate rattling the world is that which political power would emerge as the winner in this ‘COVID stirred race’ for dominance.
Questions that come to the ground are, whether a country should cooperate with others and share the results of its innovative practices or not? How to get from “(1,1)” to “(5,5)”? That is, how can one make a good outcome happen? This requires Cooperation and Trust.
Is there a need for a “third” party to enforce the peace, to enforce cooperation, to enforce a lockdown? Yes, perhaps and the “third” party can be the Sovereign (i.e., the State)?
What are the payoffs and the costs?
What should be the geo-political policy response?
Here lies the ‘tight-spot’ faced by policymakers today…
In the current times, the main players are the citizens and the governments whose choices make a difference and to a large extent play a vital role in checking the pandemic, which had constructed the game theory model in question, in the first place. COVID-19 will reshape our world. We don’t yet know when the crisis will end. But we can be sure that by the time it does, our world will look very different. How different will depend on the choices we make today. Every stakeholder’s choice is an externality for others.
Global pandemics need global solutions. ‘Radical scaling up of international cooperation among scientists, economists and policy-makers is the need of the hour’. A cooperative strategy by all the players in the ‘Covid-Game’ is the optimum one. It is the Nash equilibrium, in the ‘Covid-induced policy-cogmaire’!
Malini Sharma is the Senior Assistant Professor and Head of the Department of Economics at the Daulat Ram College, University of Delhi in India.
