One of the biggest problem the world is facing
Today, let’s play a game. The rules are very simple: in front of you, you have a green ball and a red ball, and so does the other player. In this game, you can only win money, but the amount of money you win depends on the amount of money the other person wins. To play the game, you each pick a ball on your own, but the other person doesn’t know what ball you chose, and neither do you. If both players pick the green ball, they each win 75 dollars. If one of them picks the red ball, and the other picks the green one, the person with the red ball wins 100 dollars, but the other player gets nothing. However, if both players pick the red ball, both of them win nothing.
As you can guess, this game is mainly a cooperative game, because the other person’s choice affects your results. You are not playing against the other person: if both players decide to cooperate, the amount of money distributed among them is 150 dollars, so the ‘average satisfaction’ of one player after one round is greater than if one or both pick the red ball.
However, there is another aspect to this game. Let’s jump in a player’s head for a moment. From his perspective, there are two possibilities. First, let’s suppose that his opponent picks the green ball: if he then picks the green ball, he wins 75 dollars. On the other hand, he wins 100 dollars if he picks the red ball. As can be seen, picking the red ball is more attractive. Now, let’s say that his opponent picks the red ball: if he then picks the green ball, then his opponent will win 100 dollars, and, if he decides to go with the red ball, they both get nothing. In this case, it is also more tempting to pick the red ball.
Now, you can see the paradox. The assumption that it is more profitable to pick the red in both cases ball is contradictory to the ‘average satisfaction’ principle. And there is of course a reason for that: this game is a cooperation game, and your goal is not to beat your opponent, but to make as much money as possible. And while many people may think that picking a red ball is the better solution, in the long term, the green ball brings more money. Indeed, picking a red ball causes your opponent to next pick a red ball, and so on until no one trusts the other one and no one actually wins money; the game is stuck in a lose-lose situation, called a Nash equilibrium. On the long term, it is therefore more beneficial for both players to pick the green ball, even if its means sacrificing 25 dollars, because you then get 75 more on the next round. Cooperation is the most important part of this game.
Although this game situation may seem meaningless, it actually highlights one of the biggest problem the world is facing. On example of it is the Cold War. During this war, the United States and Soviet Union faced off in a nuclear arm race, mobilizing their money, resources and time to outperform the other and scare them off. But was this really the right solution? Wouldn’t it have been better if both countries focused their interests on education and environmental protection? Because both countries assumed that the other would continue the arm race, they continued until reaching a Nash equilibrium, which led a waste of time, energy, money, resources, and death of many people.
But history has shown that this situation could occur again, and it is nowadays part of one of the major issue regarding climate change. The countries that care about the planet and that are devoted to lessen CO2 emissions and radioactive wastes have to rely on sustainable energy, which is a lot more expensive and less productive than oil or nuclear power stations. Thus, by protecting the environment, those nations agree to slow down their development, and therefore become less powerful and influential. And who benefits from this situation? The countries that don’t protect the environment, because they gain a competitive edge over rivals. This is why only very few countries are committed to convert their production of energy to a sustainable one: the world is stuck in a Nash equilibrium. And even though the solution to this problem is obvious, no one actually puts it into practice, because everyone is scared that they will fall behind.