Use game theory to explain how institutions arise naturally to manage limited resources

A simple model developed by a Riken researcher and a collaborator predicts the emergence of self-organized institutions that manage limited resources such as fishing or irrigation water. This model provides a window on the mechanism behind the emergence of these institutions. The results are published in PNA.

Fisheries, forests, freshwater and pasture lands are only a few examples of limited natural resources which must be well managed to ensure long -term sustainability.

In communities of different cultures of the world, so-called self-organized institutions emerge to manage these resources. Characterized by standards and rules that regulate people’s behaviors, these institutions seek to ensure that resources are not exhausted by overuse and that everyone has reasonable access.

“Certain examples of self-organized institutions include those that manage water sources in the Peruvian highlands and Spain and fishing on the islands off Australia,” notes Kenji Ito of Riken Center for Brain Science.

These self-organized institutions are not established by an external superior authority, but they develop rather over time at a local level. This raises the question of how they have become.

Now, by integrating game theory, dynamic systems and the theory of evolution on several levels, Itoo and Kunihiko Kaneko of the University of Copenhagen in Denmark have developed a simple mathematical model which shows how self-organized institutions can occur.

The scenario envisaged by the model is the periodic harvest of a natural resource such as fish that are naturally reconstituted. The model is both simple, with only two key parameters and on a small scale, involving two people. Each person seeks to maximize their offspring.

At each stage, a person decides to harvest. Their decision is based on current fish stocks and how good they are.

They have three options: cooperate with the other person by showing a restraint in the harvest, punishing them by over-harm if they feel that the other person was selfish or acting selfishly themselves. The category that a person’s response falls depends on the current stocks of fish and their history of interactions with the other person.

Remarkably, such a simple model has been able to predict the emergence of self-organized institutions. “It was very surprising that we obtained very rich results, even if the model was very simple, having only two parameters,” comments Ito.

The model provides a useful starting point to understand how self-organized institutions occur, explains Itoo. It wishes to extend the model to other contexts, such as the functioning of gifts in modern societies.