A Coopetitive Model for Sustainable Food Production
When companies aim to maximize their own profits, the outcome is often not what is best for humankind and the planet we inhabit. Recently, people online have been voicing their outrage about the fact that the Amazon rain forest is burning. Many people mistakenly thought that this was a freak accident, but trees are actually being burned down on purpose to create more space for cattle farms. When people learn the truth, they immediately start blaming corporations for the destruction of our planet. We can see how widely supported this sentiment is from the reception of tweets such as this one: https://twitter.com/metalcorebarbie/status/944474449167994880
It is clear why this line of thinking is popular: it allows us to keep believing that our actions have no negative consequences so we never have to face feelings of guilt. But there is a flaw in this argument. This twitter user, along with many others, is analyzing corporations as if they are players in a game, but she is failing to see how the strategy a corporation plays is based on the strategies of the consumers. We can note how, when we complete a payoff matrix for two prisoners in the prisoner’s dilemma, the payoffs summarize everything the players care about. That is, a prisoner might not simply want to minimize jail time served. They may also feel guilty if their accomplice serves time. For a corporation, the payoffs are typically based entirely on maximizing profits. A corporation does not have its own values and opinions like humans do. Even if a corporation does something seemingly generous, like donate a large sum of money to charity, this is usually a calculated move to improve its public opinion, and in turn, earn more money. This is a general rule, but there can be exceptions, such as when a particular person within the company, chooses the strategy for the organization based on his/her own morals.
It is common for people to demonize corporations for behaving in such a selfish way, but a corporation’s behavior follows the model of rationality. When individual humans choose strategies in any particular game, we act just as “selfishly,” because we will always pick the strategy that maximizes our payoffs (according to what we care about). I don’t believe that it is fair to blame corporations for climate change as a way of removing the responsibility from our own shoulders. I think corporations’ payoffs can be viewed as a sort of sum of the payoffs of individuals. Trees will only be burned down to make room for cattle if a large number of consumers choose the strategy of buying beef regularly. There is no incentive for a food producer to change this strategy if the demand remains constant. So, the strategy a corporation plays is not a selfish, evil choice, but rather a representation of what people as a whole value and are willing to pay for.
In this display of cognitive dissonance in the above tweet, we can observe a concept from this class in action. In this game, we have reached Nash Equilibrium. No person has any desire to switch strategies because they would not be able to increase their individual payoff by doing so. However, this does not mean that this is an optimal state for everyone. The world may be better off overall if everyone decided not to eat meat. No individual in particular has any incentive to personally make this sacrifice, though. This is why I believe it is not fair to put all the blame on the corporations. If we expect them to choose strategies with lower payoffs for the benefit of the greater good, then we should be willing to do the same.
The research paper linked above proposes a way in which vegan and non-vegan food producers can interact in such a way that is optimal for each entity, but also has a positive effect on humankind. This solution does not require any party to play irrationally to get the desired outcome. Specifically, the researchers proposes a coopetitive alliance between these two categories of producers. They use a company called Muscle of Wheat as a case study. This company made innovations in food production by creating a food with similar nutrient values to meat that is made entirely of vegetables. In fact, this product happens to be very similar to the Impossible Burger sold on campus. Muscle of Wheat’s invention appeals to non-vegetarians and non-vegans in particular, who are surprised at how meat-like it is. In my opinion, this is a more feasible solution to the issue of climate change than asking corporations to stop polluting the environment or asking everyone to go vegan. Some people choose to become vegan or vegetarian because they have different values than others, and as a result their choice still maximizes their payoffs. Instead of insisting that others make a suboptimal choice based on their own payoff matrices, Muscle of Wheat adjusts the payoffs themselves by creating sustainable food that is just as appealing to consumers.
Then, we can think of our game as having two players. The first is non-vegan/vegetarian food producers such as McDonald’s which are not making innovations in food. The other is smaller companies like Muscle of Wheat, which are working on creating eco-sustainable food. Then, to cope with global competitive pressures, McDonald’s will form an alliance with Muscle of Wheat and a venture capitalist to create a renewable joint venture (RJV) firm. McDonald’s will benefit from this arrangement by the amount of profit earned from providing a new product purchased from RJV to the market. For example, they may be able to increase their customer base to include vegans and vegetarians, bringing in more capital. Muscle of Wheat is able to get the necessary funding to make their product safe for consumers. They will also profit from the portion of product they sell to RJV, and the portion of product they are then able to sell to the market. The VC gains from the initial investment made by McDonald’s, the larger firm. Lastly, the market gains due to the improved food production, health, and sustainability. The authors of this paper note that there are several solutions in this game. Nash equilibria represent solutions to the competitive game, a purely coopetitive solution is given by the best Nash equilibrium of the coopetitive game – a “compromise solution on the Pareto boundary of the coopetitive Nash zone.” This second solution relates to the concept of social optimality, because the strategy chosen maximizes the sum of the players’ payoffs.
We can see how this works in real life situations. Burger King recently made a deal with Impossible Foods to release the Impossible Whooper in restaurants. Burger King found that its number of unique customers is increasing. People who haven’t been to a Burger King in years are returning to try the new menu item, or coming in for the first time because there is finally something they are able to eat. As a result, Impossible Foods is making more money and getting a lot of exposure. As a result of the deal, it is becoming a lot easier to reduce and eliminate meat consumption for consumers, thus increasing the payoff of the more sustainable strategy.