Friday, November 20, 2009

Condo Association Prisoner's Dilemma and Agincourt



The structure of a 3 player version of this multiplayer game can be seen below, click on the picture to view full scale image.


This analysis assumes association fees are $150. Further, if all owners pay, the result is a well kept community worth $150 to an owner. If all but one owner pays, the result is a slightly less kept community, worth $100. If only one owner pays, the upkeep of the community is only worth $50. If no owners pay, the community gets no upkeep, worth $0.

As you can see, I solved for the equilibrium of this game by best responses. As you can see, the dominant strategy for all three players is NOT TO PAY. This results in an equilibrium that when owners are left to their own selfish devices, they would have the community in shambles. So, how can we avoid this? Well, we need to change the owners payouts ala Agincourt. We need to instill a sense of community. I tried this just a few weeks ago with a "beautification" day where everyone comes out to clean the property, paint fences, install new pavers, etc. These activities foster a a sense of ownership and pride in the community. It creates relationships and friendships. Who would want to screw their own friends? After focusing on these kinds of activities, there is a notable difference in the attitude of the community. Owners are tending more towards paying down their debts and delinquencies are dropping. Thanks SDA!


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