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Bob Haugen (Jun 25 2020 at 22:43):I have worked with cooperative economic networks since maybe 2004. Looks like a lot of people here are thinking of economics in terms of competitive markets with adversarial relationships. Economic networks try to avoid adversarial/market relationships as much as possible. Can't avoid them entirely, because they are immersed on a market economy.
I've been looking at a bunch of @Jules Hedges stuff about game theory. If I understand correctly, an economic network would be an example of the maximally cooperative version of the prisoner's dilemma. If and when any of the participants gets greedy, either the other participants will discipline them or the network will fall apart.
Here's an example that I helped to organize: http://www.fifthseasoncoop.com/
It's a multi-stakeholder cooperative of farmers, food processors, distributors, and institutions (schools and hospitals).
I've helped to organize several of these things. A couple failed because of greedy or otherwise non-cooperative dominant participants.
By the way, most manufacturing supply chains are more like cooperative networks than market players internally. I worked in auto supply chains for several years and they work by negotiated long-term relationships, they don't go out on the market looking for components.
Bob Haugen (Jun 25 2020 at 23:24):Yr possibly obligatory academic citation: https://www.academia.edu/10252910/The_uneasy_transition_from_supply_chains_to_ecosystems_The_value-creation_value-capture_dilemma
Jules Hedges (Jun 26 2020 at 09:58):Bob Haugen said:
Here's an example that I helped to organize: http://www.fifthseasoncoop.com/
It's a multi-stakeholder cooperative of farmers, food processors, distributors, and institutions (schools and hospitals).
I've helped to organize several of these things. A couple failed because of greedy or otherwise non-cooperative dominant participants.
I have ongoing work that will probably be interesting to you, with Seth Frey and Philipp Zahn (economists) and Josh Tan (ACTist). We are using open games and my software implementation of them to build models of things along these lines. One thing we're looking at is governance of common pool resources along the lines of Ostrom. We're in the process of exploring what open games can do and how they could be useful to practitioners. They certainly allow you to do rapid prototyping of models. (A major drawback is that open games are inherently equilibrium-based, and quite often you just don't care about equilibria)
Jules Hedges (Jun 26 2020 at 10:00):So far we're not thinking about economic networks, the models we built so far have a small fixed number of players. We know how to do graphical games in theory (https://arxiv.org/abs/2006.03493) but I'm not sure how to implement it, or how to deal with any other sort of economic network besides graphical games
Jules Hedges (Jun 26 2020 at 10:01):We're planning to write a paper along these lines, for a general audience social science venue like PNAS. Look out for a preprint some time this year, hopefully
Jules Hedges (Jun 26 2020 at 10:03):It might be (but also might not be) that open games + software implementation turns out to be a good general-purpose framework for modelling of institutional dynamics
Bob Haugen (Jun 29 2020 at 19:16):@Jules Hedges I got a Haskell programmer working with me and looking at https://github.com/jules-hedges/open-games-hs
Big question will be, we don't do adversarial games, only cooperative ones. Will open games work for that?
And here's a new cooperative economic network paper that just landed in my inbox this morning:
Manufacturing Service Ecosystems
<excerpt>
High performing co-operations between independent companies with the aim to develop and to
realise customised products are an important success factor for the competitiveness of the Euro-
pean industry. Due to immense political changes and global markets, new ways of cooperations,
so called enterprise networks, can be seen in addition to the traditional supply chains. These en-
terprise networks are often formed to realise a single customers’ order and play an important role
during the conceptual phase (product design) as well as during the realization phase (produc-
tion).
The research unit IKAP prepares, develops and realises methods and tools to support coopera-
tive, inter-organizational enterprise networks. The research concentrates on efficient and effec-
tive collaborative design and production processes by applying innovative information and
communication technologies (ICT). As focus can be seen the collaborative acting of enterprises
during distributed design and production processes as well as during the late processes of the
product life cycle such as the usage phase or the recycling phase.
</excerpt>
Bob Haugen (Jun 29 2020 at 19:32):Those networks are cooperative and sheltered from market relations internally, but hit the markets on the edges.
Jules Hedges (Jun 29 2020 at 20:01):Bob Haugen said:
Big question will be, we don't do adversarial games, only cooperative ones. Will open games work for that?
So I either have bad news or very bad news, but I'm not sure which
Jules Hedges (Jun 29 2020 at 20:02):The bad news is that I have no idea how to deal with cooperative game theory compositionally. The very bad news is that my guess is that open games fundamentally can't deal with cooperative solution concepts. That really is just a guess though. I have never had time to look into it, somebody else is going to have to do the theory
Jules Hedges (Jun 29 2020 at 20:03):Open games can deal with solution concepts that are "sufficiently Nash-like" in some way I can't make precise. I think that cooperative solution concepts don't fit
Jules Hedges (Jun 29 2020 at 20:03):That's not to say that you can't do cooperative game theory compositionally. My guess is that you can, but not with open games
Bob Haugen (Jun 29 2020 at 21:02):Jules Hedges said:
That's not to say that you can't do cooperative game theory compositionally. My guess is that you can, but not with open games
Thanks, Jules. Your answer will save us a lot more digging. It was an interesting excursion, though...
Bob Haugen (Jun 29 2020 at 22:14):Does anybody know if any catsters have worked on cooperative games?
Or any other kinds of cooperative network relationships?
If you're worried about climate change, that's part of what needs to happen.