Recognizing the inequities displayed by the VP and the cost to society, efforts are made by the leaders of society to change the balance sheet for the perpetrators of uncooperative actions. This is done in several wellknown ways.
The action of paying taxes provides a good example.
When we pay taxes, the "member of group" return is not likely to compensate for the cost to the individual. So we would prefer to minimize the amount we pay. Unfortunately, the cost of not paying taxes can be substantial.
There is a probability that we may get caught if we decide to not report some income. This can be logically incorporated in our cost model by taking the cost of being caught and multiplying it by the probability of being caught. This is the expected cost.
Of course, humans can only estimate these factors and in practise, they do a very poor job. Since we are only concerned about the effective estimated cost, the accuracy is not all that important to us here.
To estimate the cost a person would have to know the actual cost as well as the probability, neither of which is generally known with much certainty. For this particular example, getting caught would result in going through and extensive legal process with very uncertain results and expenses. The probability of getting caught is very uncertain, of course.
Nevertheless, the human must form some idea of the expected cost in his mind before he decides to cheat or not cheat. Most of us assume that the expected cost far exceeds the return and forget the whole thing.
On the other hand, the expected costs to a young kid in the mean streets of Los Angeles pondering a mugging may be much lower than we would like to think. The expectation of being caught and prosecuted is quite low and the cost is not much either. So the return exceeds the cost and the crime is committed.
Back to the Table of Contents