Joung Hun Lee

Games of corruption: How to suppress illegal logging

Corruption is one of the most serious obstacles for ecosystem management and biodiversity conservation. In particular, more than half of the loss of forested area in many tropical countries is due to illegal logging, with corruption implicated in a lack of enforcement. Here we study an evolutionary game model to analyze the illegal harvesting of forest trees, coupled with the corruption of rule enforcers. We consider several types of harvesters, who may or may not be committed towards supporting an enforcer service, and who may cooperate (log legally) or defect (log illegally). We also consider two types of rule enforcers, honest and corrupt: while honest enforcers fulfill their function, corrupt enforcers accept bribes from defecting harvesters and refrain from fining them. We report three key findings. First, in the absence of strategy exploration, the harvester-enforcer dynamics are bistable: one continuum of equilibria consists of defecting harvesters and a low fraction of honest enforcers, while another consists of cooperating harvesters and a high fraction of honest enforcers. Both continua attract nearby strategy mixtures. Second, even a small rate of strategy exploration removes this bistability, rendering one of the outcomes globally stable. It is the relative rate of exploration among enforcers that then determines whether most harvesters cooperate or defect and most enforcers are honest or corrupt, respectively. This suggests that the education of enforcers, causing their more frequent trialing of honest conduct, can be a potent means of curbing corruption. Third, if information on corrupt enforcers is available, and players react opportunistically to it, the domain of attraction of cooperative outcomes widens considerably. We conclude by discussing policy implications of our results.

Graduated punishment is efficient in resource management if people are heterogeneous

In natural resource managements, people often overcome tragedy of commons by developing an institution that punishes selfish actions, thus enhancing pro-social behavior. Elinor Ostrom reported that many successful communities apply graduated punishment--the punishment level gradually increases with the amount of harm of the selfish action. This observation is apparently in conflict with a theoretical study of public good game supporting a severe and strict punishment. Here, we study the conditions in which graduated punishment enforces cooperation most efficiently. If people follow a quantal response equilibrium, the optimal punishment is a jump from no punishment to a high level of punishment then increases little with the societal harm, which is inconsistent with the graduated punishment concept. We find that the graduated punishment is the most efficient rule if there is a small probability that players action is reported incorrectly and if players are heterogeneous in their sensitivity to utility (or payoff) difference. We derive a mathematical formula for the optimal punishment when peoples sensitivity to utility difference follows an exponential distribution. When the magnitude of harm is large, the optimal punishment increases in proportion to the square root of the societal harm, thus confirming the efficiency of the graduated punishment.

Modeling socio-economic aspects of ecosystem management and biodiversity conservation

For successful ecosystem management and biodiversity conservation, in addition to ecological and evolutionary processes, we need to consider social and economic influences on the management target. Here, we introduce several theoretical models that address economic and social aspects of the human society which are closely related to ecosystem management. The first model analyzes economic decisions on the use of the common fishing ground in Jeju Island, Korea, by traditional divers and tourists. We observe that the way the number of tourists increases with the availability of resources strongly influences how benefits are distributed among fishing ground stakeholders. The second model discusses activities that raise public awareness about biodiversity, which will help maintain public support for conservation in the future. Based on control theory, we derive the optimal investment in these activities to maximize the long-term quality of the conservation target. The third model analyzes punishment scheme as a mechanism to enforce people to follow the regulation on the use of common resource. An important aspect of successful management is “graduated punishment”, in which the severity of the punishment applied to deviators gradually increases with the amount of harm caused by deviation from the rule. We show that graduated punishment is the most efficient way to ensure cooperation when evaluation errors are unavoidable and when people are heterogeneous with respect to the sensitivity to utility differences. We conclude that socio-economic aspects related to ecosystem management are promising research foci of theoretical ecology.

Agent-Based Mapping of Credit Risk for Sustainable Microfinance

By drawing analogies with independent research areas, we propose an unorthodox framework for mapping microfinance credit risk---a major obstacle to the sustainability of lenders outreaching to the poor. Specifically, using the elements of network theory, we constructed an agent-based model that obeys the stylized rules of microfinance industry. We found that in a deteriorating economic environment confounded with adverse selection, a form of latent moral hazard may cause a regime shift from a high to a low loan payment probability. An after-the-fact recovery, when possible, required the economic environment to improve beyond that which led to the shift in the first place. These findings suggest a small set of measurable quantities for mapping microfinance credit risk and, consequently, for balancing the requirements to reasonably price loans and to operate on a fully self-financed basis. We illustrate how the proposed mapping works using a 10-year monthly data set from one of the best-known microfinance representatives, Grameen Bank in Bangladesh. Finally, we discuss an entirely new perspective for managing microfinance credit risk based on enticing spontaneous cooperation by building social capital.

Optimal investment for enhancing social concern about biodiversity conservation: A dynamic approach

To maintain biodiversity conservation areas, we need to invest in activities, such as monitoring the condition of the ecosystem, preventing illegal exploitation, and removing harmful alien species. These require a constant supply of resources, the level of which is determined by the concern of the society about biodiversity conservation. In this paper, we study the optimal fraction of the resources to invest in activities for enhancing the social concern y(t) by environmental education, museum displays, publications, and media exposure. We search for the strategy that maximizes the time-integral of the quality of the conservation area x(t) with temporal discounting. Analyses based on dynamic programming and Pontryagins maximum principle show that the optimal control consists of two phases: (1) in the first phase, the social concern level approaches to the final optimal value y(∗), (2) in the second phase, resources are allocated to both activities, and the social concern level is kept constant y(t) = y(∗). If the social concern starts from a low initial level, the optimal path includes a period in which the quality of the conservation area declines temporarily, because all the resources are invested to enhance the social concern. When the support rate increases with the quality of the conservation area itself x(t) as well as with the level of social concern y(t), both variables may increase simultaneously in the second phase. We discuss the implication of the results to good management of biodiversity conservation areas.

Games of corruption in preventing the overuse of common-pool resources

Maintaining human cooperation in the context of common-pool resource management is extremely important because otherwise we risk overuse and corruption. To analyse the interplay between economic and ecological factors leading to corruption, we couple the resource dynamics and the evolutionary dynamics of strategic decision making into a powerful analytical framework. The traits of this framework are: (i) an arbitrary number of harvesters share the responsibility to sustainably exploit a specific part of an ecosystem, (ii) harvesters face three strategic choices for exploiting the resource, (iii) a delegated enforcement system is available if called upon, (iv) enforcers are either honest or corrupt, and (v) the resource abundance reflects the choice of harvesting strategies. The resulting dynamical system is bistable; depending on the initial conditions, it evolves either to cooperative (sustainable exploitation) or defecting (overexploitation) equilibria. Using the domain of attraction to cooperative equilibria as an indicator of successful management, we find that the more resilient the resource (as implied by a high growth rate), the more likely the dominance of corruption which, in turn, suppresses the cooperative outcome. A qualitatively similar result arises when slow resource dynamics relative to the dynamics of decision making mask the benefit of cooperation. We discuss the implications of these results in the context of managing common-pool resources.

Cultural evolution of hinoeuma superstition controlling human mate choice: The role of half-believer

In this study, we used a cultural dynamic model to explain the persistence of the hinoeuma superstition in traditional Japan. Men with this superstition avoid marrying women born in a hinoeuma year (or hinoeuma-women). Parents avoided childbirth during the last hinoeuma year out of the concern that their daughter would have trouble finding a husband in the future, and this resulted in a large drop in the number of babies born in 1966. A previous theoretical analysis of the hinoeuma superstition considered two alternative cultural factors: believers and nonbelievers. In the present study, we considered a third cultural factor, the half-believer. A man that is a half-believer accepts a hinoeuma-woman as his wife, but parents that are half-believers avoid childbirth during hinoeuma years. With these three cultural factors, there are two possible outcomes for the population. In the first outcome, [1] non-believers become extinct, with the population consisting of believers and half-believers; some men refuse hinoeuma-women as their mate choice, and most parents attempt to avoid childbirth during hinoeuma years. In the second outcome, [2] believers become extinct, and the remaining population consists of non-believers and half-believers; no man refuses hinoeuma-women, and some parents avoid childbirth in hinoeuma years to prevent potential harm to their daughters. If birth control fails at a steady rate, believers will become extinct eventually. The superstition is more likely to be maintained if the mother has a stronger influence on the beliefs of her children than the father.

Profit sharing and agroforestry: a theoretical study of potential conflicts in managing illegal logging risk in tropical forests

Partnership programs have gained importance in forestry management. In Indonesia, profit sharing and agroforestry are examples of partnership programs between forest managers and local communities. In this paper, we analyze potential conflicts among participants in these programs. First, we derive a recursive formula to determine the future value of a compartment of plantation to the society, which includes both the forest owner and the local community. While trees are young, the land is also used for agriculture, which is an agroforestry program. When there is a high rate of future discounting and a high rate of natural disturbances, the society may find it profitable to continue the agricultural use of the land. Second, we calculate the profit for the forest owner and the local community separately. To prevent illegal logging, the owner shares a fraction of the profit obtained by selling logs with the local people, which is a profit-sharing program. Illegal logging greatly reduces the profit for the forest owner, especially when trees are tall. Illegal logging of old cohorts is harmful to the local people as well. In contrast, illegal logging of young cohorts provides profit to the local people because they will be hired to replant young trees. Our analysis shows an “overlooking period” in which a conflict of interest exists between the forest owner and the local community. We indicate that the overlooking period can be mitigated by coordination of the shared profit and the wage for the workers.