Michael Cameron posted a nice piece on his blog about this – Sex, Drugs and Economics.
Game theory refers to the decision that a firm/individual makes depends on its assumptions about other firms/individuals. Ultimately this means that individuals will try and calculate the best course of action depending on how others behave. When we were in a Level 2 situation the advise was no mass gatherings, physical distance on public transport, limit non-essential travel etc. Although the announcements of the four levels were made clear on the Saturday it was inevitable that we would be moving to Level 4 very quickly – Wednesday. Being able to police Level 2 would have been near impossible and the risk of community transmission meant that complete lockdown was needed.
In a Level 2 situation, which was somewhat voluntary, people had two choices – Stay home (cooperate) or Act Normally (defect). The table below looks at the payoffs if you don’t lockdown early and already have community transmission.
As Cameron points out: For most people, acting normally is a dominant strategy, at least in the early stages of the coronavirus spreading. They are better off acting normally if everyone else stays home (because they mostly get to go on with their lives as normal, and have low risk of catching the coronavirus; whereas staying home they would be giving up on things they like to do), and they are better off acting normally if everyone else is acting normally (because life goes on as normal, rather than giving up on things they like to do). So, individually people are better off acting normally.
Any voluntary measure is subject to the prisoners’ dilemma which is why we went to an early full lockdown. As we are in lockdown repeated games requires trust and the correct behaviour outlined by the government – this is essential to eliminate the virus. Therefore the dominant strategy of ‘Act Normally’ is no longer an option. Cameron quoted Robert Frank whom I have blogged on here
‘smart for one, dumb for all’.
Stay safe everyone