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Values Scaling Individual and Multiparty Decision-making, Learning Dynamics

A. Introduction
In the first two sections of our exploration of values, we structured our study by distinguishing between what was termed objective and subjective forms of valuation. The idea behind that structure was to understand some of the categorical dynamics that occur when trying to establish priorities for environmental policy. We should all agree the first step in any environmental policy is to determine a problem that requires fixing. But what exactly can be defined as a problem depends in large part on how the problem is perceived. What we should take away from the previous discussion on values is that perception of environmental problems can occur through two categorical means: Objective perceptions attempt to identify problems through a more scientific lens by establishing standards (human wellbeing for instance through a doseresponse methodology) that then forms the basis of identifying an environmental problem. If observations find the established standards are at-risk, then policy initiation seeking to protect against that risk is justified: the problem is defined by comparing observations to the standard. Subjective perceptions identify problems not necessarily based on the actual hazard posed by the risk, but rather on how the risk is internalized by the public through social norms and community values: heuristics. If a risk is accepted by a community, then that risk may be discounted because it is accepted by the community. Key factors influencing acceptance of a risk include the relationship between the risk and the community; a community that has lived near a dangerous condition for decades with no negative impact may discount the risk because of their previous experience (familiarity) with the risk. However, an event that alters that previous experience can change the community acceptance of the risk; for example, if the dangerous conditions suddenly becomes symptomatic within the population. The key in subjective perceptions is to understand the identification of a problem is only one factor in gaining public support for policy directions: other less objective factors must be analyzed in order to determine the potential acceptance of a proposed policy initiative to deal with the problem.

The purpose of this section is to take the information we have gleaned about values and their role in helping to understand environmental problems and add the component of decision-making dynamics, both individually and multiparty, to our understanding. Consider that the process by which people make decisions can have a strong influence on acceptance of public policy in general, and environmental policy in particular (especially where environmental policy often means incorporating costs to the environment that were

previously externalized).1 Having some understanding of how value decisions are made, including the important role incentives play in decision-making, is a critical way of gaining insights into human behavior patterns that help to drive reactions to environmental policy proposals. This section is about introducing some of these behavior dynamics.

B. Perspective Providing a Basis For Sound Environmental Decisions

Consider the following process for making environmental decisions through a benefitcost analysis: Variables are identified, defined, and weighted.2 Through total value accounting, all benefit and costs of a proposed action are identified. The benefits and costs are balanced to come to a decision.

Underlying this process are the social mores of society, the ideas behind fairness, equity, and similar collective goals in our societal ideal. The way in which our decision-making process becomes more objective (repeatable) is if we are able to strongly connect the presumptions being made in the process identified above. Specifically, what rationale was used in determining the set of variables for the benefit-cost analysis? Also, how were the weights established for different variables, and what might happen if we change the weights: does changing the weights of different variables change the result?3

In some ways environmental policies require people to pay for things they previously did not have to pay for. An example is a tax on carbon to internalize the costs of climate change. None of us have had to pay for the amount of carbon we emit through our actions. Forcing us to pay for this cost (as real as it may be) fundamentally changes our expectations about society. If we always paid for this cost, then we may more accepting (habituated). However, because we are not accustomed to paying the cost we are likely to be recalcitrant, at least up-front.

Remember, the weighting is where personal bias (preference) can arise. In addition, the choice of variables also matters; it is possible bias can result in choosing certain variables over others. The point is the process is not entirely objective.

A simple example: we are engaging in a benefit-cost analysis of taking action today to curb climate change impacts. Two variables chosen are current generation and future generation (without defining specifically how these variables are distinguished from one another here in the example). In one analysis we weight current generation more than future generation. The result of the analysis is that we do less to curb our actions today because of the harm on the current generation. In a second analysis we weight future generation more than current generation. The result is that we do more today to curb our actions because of the harm on the future generation. The weighting reveals our bias;

So what we are really talking about here is ensuring a transparent process that is grounded in reason when we are engaging in making environmental decisions. To help us understand the role of bias, we explore human behavior dynamics at the individual and group setting to develop insights into presumptions used in environmental policy analysis.

C. Decisions at the Individual Level

Individual decisions are value-laden enterprises. Consider the introductory materials in the text on this point, particularly the example of choosing to be a vegetarian. Quickly the simplified stimulus-response (Im hungry I need to eat) becomes complicated through the human lens as additional value questions complicate the decision of eating. No longer is the stimulus (hunger) met by simply finding any food to eat (the response); now the response becomes complicated by choosing amongst different kinds of available food. The fact that choices exist provides the basis for exhibiting preference. In the world of environmental policy, we might define these preferences as alternatives (different ways of going about accomplishing a goal). How preferences emerge (choosing to be a vegetarian) and how strongly the preference is held (will I still be a vegetarian if Im starving and only meat is available?) are important factors in understanding the extent to which the values are driving individual decisions. Consider the following figure separating different categories of property rights based on the characteristics of excludability and divisibility:

weighting current generations higher is a bias towards wellbeing today, while weighting future generations higher is a bias towards wellbeing in the future. Underlying the weighting are ethical questions and implications. Stating these biases (presumptions) is one key to ensuring the analysis is transparent.

As noted in the text, the type of property right being described is often linked to the kinds of incentives that arise in individual decision-making. This is particularly true in questions related to environmental policy and management; precisely what incentives arise can be impacted by the characteristics of the resources (ala Mancur Olsons The Logic of Collective Action and Elinor Ostroms work on Common Pool Resources). Most difficult environmental problems today tend to be the kinds that represent situations where the characteristics of the resources are highly divisible but non-excludable. Knowing this can be helpful in a few ways: First, we can link individual incentives to the kinds of property right characteristics represented in an environmental problem. Second, where a property right characteristic is creating an incentive to act counter to an environmental goal, and the property right characteristic is capable of being changed, then a possible policy direction can be identified.4 Third, common values may be identified that aid in limiting defectors from environmental goals (in the group setting). This is not about changing individual incentives, but rather about identifying the factors that allow for the expression of

For example, changing the excludability characteristic (moving from low to high excludability) may result in better stewardship outcomes (through privatization of the resource).

individual incentives leading to undesirable outcomes. Altering the factors (rules) can marginalize the individual incentive to cheat (free ride).5 By understanding the connection between property right characteristics and individual incentives, we move closer to comprehending a key element of environmental policy: getting people to agree to a policy direction whether voluntarily or through coercion. By altering property rights we can focus on a framework that achieves the policy goal regardless of the values and incentives driving individual behavior you dont change people, you change actions.

D. Revisiting Learning Dynamics

We previously discussed learning dynamics by categorizing learning into two main types for environmental policy purposes (other purposes as well Im sure): belief learning and reinforcement learning. It was noted that learning is really an expression of behavior patterns, whether those patterns are based in belief, experience (reinforcement), or a mix of the two. The expression of a behavior is itself a representation of value if we assume that we tend to express aspects of ourselves we value (there are exceptions of course). So when we speak of learning dynamics, we are really talking about the expression of value. What is of note to understand here is that having a value and expressing a value can be two different things, particularly when we move from individual value systems to group (multi-party) value systems (the standing ovation problems highlights this distinction). Identifying different ways of learning as a means of understanding value development was dealt with earlier in the discussion on belief and reinforcement learning. What we are focused on now is how the expression of values can be impacted through interactions in society. Remember, environmental policy does not have to be about changing people (changing what they value, how they learn, etc.), but rather changing how they act (behavior patterns). The materials presented in the text on the Prisoners Dilemma, Stag Hunt, and Standing Ovation Problem offer us examples of how different contexts can alter a persons expression of value, without necessarily considering the underlying values of the person. By understanding these concepts we can gain some insights into human behavior patterns as forms of expression, and what kinds of stimulus can create incentives to move behavior expressions towards environmental goals. The details of the Prisoners Dilemma and the Stag Hunt are well described in the text: we will not attempt to rehash them here. However, there are a few points I do want to reinforce about these two games in terms of how they relate to human behavior patterns:

The example provided in the text discusses privatizing parts of the atmosphere by charging for each unit of carbon emitted into the atmosphere. By doing so the common resource (atmosphere) becomes excludable, and like a toll good the user must pay to pollute. The incentive to pollute (externalize the cost) does not change, but rather the rules providing an opportunity to exercise the incentive have changed.

First, consider the importance of compulsion in non-cooperative games like the Prisoners Dilemma. When information is not freely shared (no opportunity to negotiate between players), then we often find individual incentives will dominate (people will tend to express their personal value preferences and individual incentives without consideration of other people). However, this is not complete. Consider the visual example of learning from the text copied below. Even without the ability to directly communicate between players, the actual results of each game being played provide learning opportunities; the likely actions of ones opponent may be gleaned from previous interactions (iterations of the game). This is an example of reinforcement learning in action; a person can learn from past experiences and alter their behaviors in the future, even if this does not mean altering underlying value systems. Thus, reinforcement can be a powerful policy tool regardless of individual preferences.

Second, consider that compulsion, and thus the need for reinforcement learning, is less important in cooperative games like the Stag Hunt. Because both players have the opportunity to exchange information before selecting a strategy, there is the opportunity to achieve a superior strategy where the payoffs are highest for both players. This underlies the idea that sharing of information is a key component to an optimum expression of preference.6 If information can be shared

Note the difference in how information aids in learning between the Prisoners Dilemma (non-cooperative) and Stag Hunt (cooperative) games. In the Prisoners Dilemma, there is no voluntary sharing of information; the information is gleaned only through

prior to action being taken, then there is a greater likelihood that sharing leads to better (more efficient) policy outcomes. Third, the Standing Ovation Problem brings up the dynamic of group interactions and how the expression of preference can be altered in the group setting. What is important here is the role of peer pressure (compulsion) in altering the expressing of personal values; a person can often feel compelled to applaud by the actions of surrounding actors; what goes on around us can influence how we behave (even if it does not influence what we believe).

E. Bringing the Message Home

So values are complex things: they are not always easily discerned, not always based on objective evidence, and they dont always express themselves in action. However, expressions of value truly do drive environmental policy decisions. Consider the influence they have in connecting good information to appropriate outcomes (say a rational approach). Science may be able to guide us to accurate information about the Earth system. Economics can provide us with frameworks for making decisions based on good scientific information (total value accounting through an ecological economics approach). However, this information is D.O.A. (Dead on Arrival) if there is no popular support in the public for taking actions that incorporate the good information that is yielded from the science and economic frameworks; in many ways this is the conundrum of environmental policy connecting good ideas into the behavioral fabric of society. The materials presented on values are meant to provide an overview of human behavioral interactions. The goal is two-fold: First, the materials allow us to gain insights into how humans develop and express values. Because there are so many nuances that go into the process of developing personal values, we separate the question by focusing on ways of learning, and then divide learning dynamics into two main types: reinforcement and belief. Understanding the role (and impact) of different learning patterns on value systems helps one understand the dynamics involved with the internal acceptance of policy directions (does the policy fit my internal values?). Those who base their values on experience may be more willing to accept new information, while those who base their values on belief systems may be less willing depending on the fit between the policy direction and the belief system, and also the degree to which the belief is held.

experience (past games) between the players. In the Stag Hunt, the information is learned voluntarily before a strategy is chosen. Thus, in the Stag Hunt parties can agree to a superior strategy early in the interaction (because of cooperation). When information is not voluntarily shared, as in the Prisoners Dilemma, the learning dynamics are time consuming and thus more costly.

Second, we can see how the structure of interactions between individuals and within group settings can impact value expression. Game theory helps us understand the dynamics that can occur in cooperative and non-cooperative settings. In addition, agent-based modeling allows us to see how dynamics might occur within group settings, particularly the factors that might influence the expression of individual preferences including when an individual might feel compelled to act in a way that differs from their personal value system.

This is a complicated arena (human behavioral dynamics) that is continually evolving; we are constantly learning new things about how humans believe and express their beliefs individually and within a larger social context. The final part of this chapter focuses on how different government settings can influence behavior dynamics. Ultimately policy acceptance on the group level (societal level) may come down to ensuring that, regardless of individual preference, the group as a whole understands the policy provides greater benefits than costs, and to the degree possible, creates a sense that the benefits will be distributed in such a way that individuals will receive those benefits in a manner that exceeds individual costs. Consider how this might work in something like a carbon tax; individuals will have to feel that whatever they are paying for the tax, they are individually receiving greater benefits from the reduced potential for climate change precisely how to get that message across would be a huge win for environmental policy.7 I hope you have enjoyed the materials presented in this course. More individual work on certain areas is undoubtedly required, but upon completion of these materials you have a truly solid foundation from which to understand the dynamics of environmental policy thank you! END OF SECTION.

One way to do this is to focus on secondary effects. If the carbon tax can be shown to limit the burning of coal, and the burning of coal can be shown to increase respiratory illnesses (due to increased air pollutants), then people may more easily identify with the secondary effects being highlighted in the policy initiative (prevent respiratory illnesses like environmental asthma) because they are more directly connected to immediate human health concerns (whereas climate change may be less connected).