Playing without rules

In the mid-eighties, we had applied to the Department of Science and Technology (DST) for travel funds for one of our students. A research paper written by the student had been accepted for presentation in a prestigious international conference on Game Theory. Our Institute did not have funds for travel to conferences for students, but the DST did give out such funds. The application was returned with a note that we should re-apply, not to the DST, but to SAI""Sports Authority of India. Reading Professor Raghunathan's book, I wish he had written this some twenty years ago. Better late than never; this book should be a must-read for all Indians.

The book is not a treatise on game theory, nor does it analyse complicated concepts in the discipline. It does precisely what it sets out to do""show how some specific concepts in game theory can help us explain much of what we see around us. First and foremost, game theory is a way of approaching problems and events around us and this book does an exceptional job in driving this home to those uninitiated in game theory.

The book is centred on the so-called "prisoner's dilemma" and how it affects aggregate outcomes when people act in their self-interest. The author has a rather lucid way of setting up his examples, most of them drawn from what we experience everyday. The central theme is to show how cooperative solutions are better for everyone, in the long run. However, driven by narrow and immediate self-interest, most Indians fail to see this and, hence, the cooperative solution never occurs. This can explain why India has one of the most disorderly forms of traffic, corruption in all walks of life, unauthorised buildings encroaching on public space and garbage dumps in our neighbourhoods.

The question that remains to be answered is what makes India different from many other countries. Since game theory explains how people behave, and not just Indians, it is important to understand why we cannot achieve what others have. This is an especially significant issue since Indians, born and brought up in India, go on to become model citizens abroad. The author refers to the Gita to establish that there are enough instances to suggest that we have a rich heritage of striving for, and achieving, cooperative solutions. There is nothing in our genes, or culture, that makes us selfish and non-cooperative.

This brings me to the one missing link in the book. While the author does an excellent job in demonstrating why cooperation is better, he fails to suggest how it can be achieved or, more importantly, how other societies achieve such outcomes. The essence of the argument in the book can be summed up thus. If everyone else behaves in a desirable fashion, it pays me to behave myself; if I am not sure how others are going to behave, it makes sense for me to misbehave. What is worse is that when others behave cooperatively, I can gain a windfall by free riding. The issue then boils down to ensuring that everyone behaves in the proper way. Indeed, more than that, everyone must be convinced that everyone else will behave properly. And this is where third party enforcement of "cooperative rules of behaviour" becomes important.

India has prided itself on being one of the few developing countries that have always followed the rule of law. However, when one looks at the examples referred to in the book, one realises that in our daily lives nothing is further than the truth. And, hence, even though we may solemnly agree to reach the cooperative solution, we will free ride whenever possible. For instance, everyone knows that tapping more water from the water mains (with a pump) reduces the supply of water to other houses. However, since everyone else does it, the one who does not do it gets no water. So, everyone ends up using pumps on the mains. The net result is that everyone gets the same amount of water as they would have had if no one tapped the water illegally but now they pay the cost of the pump. The solution lies in punishing those who tap water illegally.

In history, religion and the fear of God were sufficient to keep people honest. In modern times, law and its enforcement are what keep the cooperative solution going. Otherwise, everyone plays the game the way Indians play. The book goes a long way in showing us why we are wrong; we should be able to figure out how we can set it right.

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GAMES INDIANS PLAY

V Raghunathan
Foreword: N R Narayana Murthy
Portfolio: Penguin Group
Price: INR 325; Pages: 170