Archive for the ‘South Asia’ Category

This describes a coordination failure with farmers being unable to collude because incentives to cheat and defect are high. The risk in coordination lies mostly with a farmer who can see that he is able to cheat, which would allow the farmer who did not cheat to bear the entire risk of his crops being destroyed.

This is similar to the prisoner’s dilemma where both players will miss a Nash Equilibrium and a socially optimal strategy by playing their dominant strategies.

Furthermore it touches upon the notion that reducing corruption and increasing trust are prerequisites for meaningful economic development.

Palanpur farmers sow their winter crops several weeks after the date at which yields would be maximised. The farmers do not doubt that earlier plantings would give them larger harvests, but no one, the farmer explained, is willing to be the first to plant, as the seeds on any lone plot would be quickly eaten by birds. I asked if a larger group of farmers, perhaps relatives, had ever agreed to sow earlier, all planting on the same day to minimise the loses. “If we knew how to do that,” he said looking up from his hoe at me, “we would not be poor.”

Via “Origin of Wealth” (chpt Design Spaces), Eric D. Beinhocker.

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