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Inducing peer pressure to promote cooperation.

Ankur Mani1, Iyad Rahwan, Alex Pentland

  • 1Massachusetts Institute of Technology, Cambridge, MA, USA.

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|April 27, 2013
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Summary
This summary is machine-generated.

This study introduces a novel approach to foster cooperation in large societies by localizing externalities within social networks, leveraging peer pressure. This method proves more budget-efficient than traditional Pigouvian taxation, even with low budgets, significantly improving outcomes.

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Area of Science:

  • Social Sciences
  • Behavioral Economics
  • Network Theory

Background:

  • Achieving cooperation in large societies is challenging due to widespread externalities, often leading to the 'tragedy of the commons'.
  • Traditional solutions like Pigouvian taxation aim to internalize these externalities but can be costly.
  • Self-interested individuals may not cooperate when the impact of their actions is diffused across society.

Purpose of the Study:

  • To introduce and evaluate a new mechanism for promoting cooperation by localizing externalities to social networks.
  • To compare the effectiveness and budget efficiency of this peer-pressure-based mechanism against traditional Pigouvian policies.
  • To demonstrate how social network structures can be leveraged to overcome collective action problems.

Main Methods:

  • Development of a joint model integrating externalities and peer pressure within a social network framework.
  • Simulation or analysis comparing the proposed mechanism with Pigouvian taxation under various budget constraints.
  • Quantification of the budget required and the resulting improvement in cooperative outcomes.

Main Results:

  • The proposed mechanism effectively leverages peer pressure to regulate behavior and promote cooperation.
  • This social network-based approach can be more budget-efficient than Pigouvian taxation.
  • Significant improvements in cooperative outcomes were observed even with limited budgets.

Conclusions:

  • Localizing externalities and utilizing peer pressure offers a viable and potentially more efficient alternative to traditional policies for fostering cooperation.
  • Social network structures can be powerful tools for addressing collective action dilemmas.
  • This approach holds promise for enhancing cooperation in large-scale societal contexts.