https://ramurrio.medium.com/games-without-frontiers-980abb60b1e7

The term “Stable Cheaters’ Equilibrium” refers to a situation in game theory where participants in a game or system find themselves in a situation where cheating or deviating from the intended rules becomes the norm, and this behavior is self-reinforcing and difficult to reverse due to its stability. To understand this concept better, let’s break down the components:

1. Equilibrium in Game Theory: In game theory, an equilibrium is a point where all participants have no incentive to unilaterally change their strategies given the strategies chosen by others. In other words, no player has an incentive to switch their strategy if they know what the others are doing. There are different types of equilibria, including Nash equilibria, where no player can improve their payoff by changing their strategy while others keep theirs.

2. Cheating in Equilibrium: Cheating in this context refers to deviating from the agreed-upon rules or strategies of the game in a way that benefits an individual player. This could involve actions that give a player an unfair advantage, despite the collective intention to play by the rules. Cheating can be advantageous for a single player in the short term, but if everyone starts cheating, the system’s integrity and benefits can erode.

3. Stability of Cheaters’ Equilibrium: A Stable Cheaters’ Equilibrium occurs when a significant portion of participants in a game or system adopt cheating as their strategy, and this behavior becomes self-reinforcing and difficult to reverse. Essentially, everyone is cheating, and there’s no incentive for any individual to stop cheating because doing so would put them at a disadvantage compared to others who continue cheating.

4. Example: Tragedy of the Commons: A classic example of a Stable Cheaters’ Equilibrium is the “Tragedy of the Commons.” Imagine a shared resource, like a pasture, where multiple farmers graze their animals. If each farmer decides to graze more animals than their fair share, the pasture becomes overgrazed and depleted, leading to long-term damage to the resource. Even if individual farmers recognize the problem, they might continue overgrazing because if they stop, they suffer a short-term loss while others still exploit the resource.

5. Addressing Stable Cheaters’ Equilibria: Stable Cheaters’ Equilibria can lead to detrimental outcomes in various situations, as the collective good is sacrificed for individual gains. Addressing this requires coordination, incentives, and sometimes regulations to encourage participants to follow the agreed-upon rules and strategies. It might involve penalties for cheating, rewards for cooperation, or altering the structure of the game to disincentivize cheating.

In summary, a Stable Cheaters’ Equilibrium represents a situation where cheating becomes the norm and is self-reinforcing due to the dynamics of the game. Recognizing and addressing such equilibria is essential for maintaining fairness, sustainability, and positive outcomes in various systems, whether in economics, environment, or social interactions.