- Tayloring Game Theory the Ostrom Way
"We now consider the possibility of "designing cooperation," just as engineers have been concerned with the problem of designing electric switches. We are very much at this stage of basic research, more physics than real engineering, but I want to argue that our success has been real, and I want to emphasize that this achievement has been at the very top of what has happened in economics during the last couple of decades." 1
In the academic year 1987-88, Reinhard Selten organized the "game theory in the behavioral sciences" project at the "Center for Interdisciplinary Research" (ZiF) of the University of Bielefeld in Germany. 2 The times before the ascent of the internet were different from ours as far as academic collaboration and exchange were concerned. Even though some researchers were already using a rudimentary form of webcommunication, physical presence was more important than today. So, beyond the fact that Reinhard Selten was calling, scholars with diverse disciplinary and national backgrounds had a stronger incentive than today to come to the ZiF for extended periods of time to interact with each other. 3
Beyond physical presence, command of broken English—as the general language of science, some game theory, as well as the modern "lingua franca" of behavioral science—made communication among group members across disciplines and national backgrounds viable. However, it took open-minded and outgoing scholars like Elinor Ostrom to get collaboration [End Page 37] really going. Her presence through most of the research year was an important contribution to the project. That the project became a success is sufficiently documented by the four volumes of papers written during the year. 4 It is less well known that Elinor Ostrom had been presenting and discussing many topics of her book on "governing the commons" 5 during her time at the ZiF. Since the book became a seminal contribution to social theory it may be of some interest to put things into the perspective of another participant of the research project. This is what I will try below, heroically leaving aside later books and papers and referring instead to her "Beyond Markets and States: Polycentric Governance of Complex Economic Systems." 6
In 1984 James M. Buchanan had given me his good advice that I should read Vincent Ostrom's work on "the political theory of a compound republic." 7 For me as a European political philosopher-economist this seminal interpretation of the specific blend of empirical and theoretical views of the "American Founding"—as represented in particular in "The Federalist Papers"—was an eye-opener. Since I had the tip, so to say, "from the mouth of the horse" I was looking forward to meeting Vincent Ostrom when I came for two months to the ZiF. Talking to him was indeed very interesting and gratifying. But it became almost immediately clear that Elinor Ostrom was more inclined towards the modeling aspects of economics and game theory than Vincent and thereby even closer to my interests.
The similarities in certain starting points were actually rather striking. We both admired Reinhard Selten's philosophical approach to game theory and Vincent Ostrom's approach to the political theory of the American founding and its background in the theories of the British Moralists. 8 Both of us had worked on building a bridge between these two seemingly disparate strands of social theory for about a decade. Trying to bring together the two approaches we had, somewhat paradoxically, become both more optimistic and more pessimistic about the contribution of formal modeling to social theory. We had become increasingly convinced of the value of non-co-operative game theory or rational choice modeling (RCM) as a tool of representing complex interactions. At the same time we became increasingly skeptical about the prospects of rational choice theory (RCT) as a means of explanation. 9 [End Page 38]
Michael Taylor's book on "anarchy and cooperation," 10 practically unknown to the formal theorists, had been at root of a kind of "new game theoretic turn" in social theory (the old one being associated with the work of Thomas Schelling in particular). 11 It bridged the gap...