John Nash Goes to Bali

Conventional economic logic suggests that downstream water access and pest abatement present collective action problems requiring the helping hand of government. So how have Balinese farmers managed to cope with both issues using a centuries-old, decentralized, cooperative system? Two scholars at the Santa Fe Institute have constructed a game theoretic model to explain it. (Via SmartMobs.)

Comments

[Kevin Carson]

Fascinating article. This is a brilliant example of how voluntary cooperation in a stateless society can solve the "public goods" problems welfare economists like to talk about.

I wonder if something like the Balinese water temple network could solve the problem of overfishing--something based on a trade association, maybe?

Maximizing one's utility does not by any means imply an "economic man" caricature. All personal preferences enter into the calculation of "utility"--and avoiding the moral disapproval of one's neighbors is one of them.