So let me talk a little bit about my own research about how to sustain cooperation. And it's about sustaining cooperation in loosely knit organization. Okay. Cooperation has been associated with closely knit group or organization. What I mean? Well, what do I mean? Well individuals know each other well in a closely knit group or organization and they stay in the organization or in the group for a very long time, so this is what I call closely knit organization. A wonderful example is given by this picture. Okay. Lots of people are fixing a roof of a house in rural village in Japan. And fixing a roof it, it takes lots of time and effort. And villagers are cooperating to amend or fix the roof of houses of each other. Okay, so this is one example of people cooperating in closely knit organization. This small village, has many villagers, and they know each other well. And they stay in this village for a long time. And again, it's very easy to sustain cooperation. Okay, so, the basic mechanism to sustain cooperation is basically the same as in the gas station example we have seen in, in the previous lecture. So, in sociology for example, cooperation is usually associated with very closely knit organization or group. This is a received idea in sociology. But in one of my recent researches, I collaborated with a sociologist. Shinya Obayashi at Sendai- Tohoku University. And we showed the following. Well, cooperation in a loosely knit organization where individuals enter and exit frequently. And they don't know each other well, and they stay in an organization for a very short of time. It's possible to sustain cooperations- it's possible to sustain cooperation, theoretically. So, sustaining cooperation in a loosely knit organization is not only theoretically possible, but we found a remarkable real-life example, okay. So this is based on a paper, joined with Shinya Obayashi at the Tohoku University, published in Proceedings of the National Academy of Science 2004-, 2014, this year. Previous year as of today. Okay, theory of cooperation in loosely-knit organization. Let me start with theoretical possibility, okay? Loosely-knit organization can be formulated as a special kind of repeated game called OLG repeated game. What is OLG? OLG stands for overlapping generations of players. Okay, so this picture summarizes a typical situation in Overlapping Generation repeated game. So there is an organization, but people are coming and going. And each segment here, oh, okay, time is flowing in this direction. And each segment here represents one player. So this white player enters into the organization here and he exit. And then yellow player comes and so on. So at any moment of time, three players are interacting each other and people are coming and going. So this is a formal mathematical model to represent loosely knit organization. Okay. How is cooperation sustained in such a game? Well, it's very simple. So, let's consider this yellow player. So yellow player is helping this gray player here. Gray player is old player who is about to retire. And the yellow guy is helping this guy. Why does he has a- have an incentive to help this old player? Well, if yellow player helps this old player, he is going to be rewarded by younger generation player. Okay? In long term relationship, good behavior is reciprocated by the same person. But in overlapping situation, a good behavior to retiring player is going to be rewarded by future generation players. So this possibility of cooperation was pointed out by a number of researchers Cramer, Smith, and including myself. Okay, so, that's the theoretical possibility. And let's talk about a possible, real-life example of cooperation in loosely knit organization. A wonderful example we found was, what's called Community Union. Actually, my co-author Shinya Obayashi was first to notice that community union was a wonderful example of overlapping generation gain. Okay, community union is a labor union with a very unusual form. And let's explain the structure of Community Union. The definition of Community Union, Community Union is a labor union which admits individual affiliation. So, let me explain what I mean. So, let's suppose you are working for a company, and you and the company have a labor dispute. If the company has a labor union, the union can represent you and fight against the firm. But let's suppose the, the company doesn't have any labor union. Then, one thing you can do is join Community Union by yourself, okay, even if no other people in this company are joining Community Union, you alone can be a member of a Community Union. Okay? Single affiliation is allowed in community labor union. And then, Community Union can exercise its legally protecting, protected rights to negotiate with the- this firm to resolve the labor dispute between you and the company. Okay, so let me explain a typical life of a member of a Community Union. So first you have a problem with your company, dispute happens, and then you join the union as a single member from the company, and then union can negotiate with the firm, and if negotiation if an agreement is reached in the negotiation, then that's the end of the story. But oftentimes, an agreement is not reached in union-firm negotiation. And then it goes into the second stage. So, if agreement was not reached in negotiation, then labor union can, you know, organize protest activities. I think you have seen lots of people, you know, shouting in front of a firm. That's called Protest activities. It's legal. Because it's based on legally protected rights of a labor union. Okay? So, union can organize protest activities and also a union can sue the company in litigation. And there is a less costly and easier alternative for litigation, which is called the Labor Relation Commission. It's a third-party mediation system, organized by local government. Okay? So, a union can perform those activities and then the dispute is resolved and then the member usually exit fro, from, from the union. Each member only stays in the union for one or two years. Okay. So we conducted a case study about one of the labor unions called the Tokyo Managers' Union. And it has 231 members as of 2012. And actually, there are lots of entries and exit. So, in the fiscal year of 2012, altogether, compan, the union had 105 entries and 108 exits. And entries and exits are more or less equally distributed over the year. Okay? So there are lots of entries and exit. And what's the duration of each member? Well, each member stays in union on average 1.92 years, okay? So this union has a structure which is, you know, closely related to Overlapping Generation Game. So people are coming and going. And each player stays in the union roughly 1.92 years. Okay, so do they cooperate? Well, mainly cooperation happens here in protesting activities, and attending court session, and attending the labor relation commission meetings. We found that members are helping each other here. And typically, you know, if you organize protest activity against your firm to, usually, something in between 5 to 20 member come to help you. Okay? So, lots of cooperation is going on in this, organization. Even though organization is very loosely knit. Okay, the next question. How is cooperation actually sustained in the union? Okay, so how is cooperation sustained in the union? Well, the basic mechanism was already explained. If the yellow player is helping gray player, then future generation reward him. Okay? If he deviates, future generation punishes you. Okay? One possibility is trigger strategy. If you cheat here then cooperation breaks down in the future. Everyone stops helping in the future. This is trigger strategy. One possible way of sustaining cooperation in union. This is silly and actually we have no evidence that they are playing, trigger strategy. Okay, so this is theoretically possible but this is not the mechanism in the union. Okay, so let me tell you one important thing here, theory of repeated games show that there are lots of other ways to sustain cooperation. Trigger strategy is not the only way to sustain cooperation. Okay? So the challenge here, is to find out the mechanism actually used in the area? Okay what about the possibility of Reputation mechanism that we, we have seen? If yellow player is doing good thing, he maintains good reputation and people who have good reputation are going to rewarded by future generations. Okay? Originally, we suspected that this could be a mechanism in the union. But actually we found no support for reputation floating around. Okay? People don't know each other's reputation well in, in this community union. So, this is not the mechanism in the union. Okay. So, what's the difficulty of sustaining cooperation in this union? Well. Let's go back to this diagram. Yellow guy, suppose the yellow guy is not helping this old guy. Okay? So you can interpret this situation in two completely different ways. One possibility is that this yellow player is just cheating. You know? He's supposed to help old guy but he's cheating. That's one possibility. And if that is true, he should be punished. He's cheating, not helping this guy, so he should be punished. Another interpretation, this guy is not helping gray player because gray player is a bad guy. Actually yellow player is punishing a defector. This you know, gray guy. If that is true, yellow player should not be punished. Okay? So if one is not helping someone, there are two interpretation and maybe it's defection or maybe it's punishing a defector. And the difficulty is that typically members do not have detailed information to distinguish those two cases. Okay. This is a basic difficulty in the union. Okay. So, finding out how to sustain cooperation in such a situation is known as a very difficult problem in repeated game. It's associated with partial monitoring, called private monitoring. But by conducting a detailed interview with one member we, we discover a very clever simple equilibrium, that can sustain cooperation in labor union. Well time is short. And I don't have much time to describe and explain the details of this equilibrium. So if you are interested you can read our paper. It's freely available at the website of Proceedings of the National Academy of Science
