Comment by godelski

  > However, in that world, a company that chooses not to contribute

I swore I addressed this point, but I can't find it. You're right. I should have addressed this.

But this is still not an optimal strategy. It can give you a short term edge, but you're completely right that it destroys the natural coalition equilibrium. The result is that this destroys the coalition. You get the benefit for a small time period but it doesn't take long for the coalition to be abandoned and once that is done, you no longer gain from this strategy. In this situation the total utility in the system decreases! Not just globally, but each player's utility drops! That's a major problem! It is sacrificing long term rewards for short term ones. Importantly, those long term rewards are quite significant while the short term ones are not.

  > How do we adjust the incentives so that bad actors are not motivated to cheat the system?

My answer? The government. I'm not a fan of big government, but they definitely have a role to play in the economy. A third party actor that serves as a moderator. Regulation to ensure that (near) globally beneficial (yet unstable) equilibria are maintained. Such regulation is beneficial to all parties involved, even the one that wants to undermine the coalition. I mean we can't just have shit being fucked up every time there's a dumb or malicious actor. A lot of things are unstable equilibria and it does take work to maintain them. A third party (especially one that benefits from global utility as opposed to individual utility) is necessary for stability. The other answer is, of course "The People". But this is a much more chaotic group, more easily influenced by nearsighted actors who can often convince them to also be shortsighted, especially when dealing with more abstract concepts..

  > this is similar to playing Iterated Prisoners' Dilemma

It's worth noting here that Tit-for-tat strategies are optimal in this game AND maximal utility to any party is achieved when all parties cooperate continuously. But it is worth noting that humans are a bit irrational and have memory. Also worth noting that human actors are not rational. Hence the need for a third party moderator, which logically benefits both parties by saying "Stop being dumb and shooting yourself in the foot. This is an iterative game."

For some reason people think zero-sum games are common. Lump of Labor (Fixed-Pie) Fallacy is really common[0]. I do see high rates of zero-sum thinking around here on HN and in CS communities, and I'm not sure why it is so common. While I don't have the same expectations for the general public, we create things out of essentially limitless resources. We frequently create value that does not require additional compute or meaningful consumption of current resources (which is also increasing as time marches on). Our whole job is built on the fact that the pie continually grows in size and we are strongly rewarded for making the pie larger in the first place!

[0] https://en.wikipedia.org/wiki/Lump_of_labour_fallacy