Why Is China a High-Lambda Society?
Cultural and social values influence the level of cooperativeness in society, which in turn determines the level of lambda. Lambda (X) represents the parameter used to determine the degree of cooperativeness among a particular societal group or society. Martin Weitzman and Chenggang Xu (1994) used a prisoner's dilemma game to demonstrate the influence of cooperative culture on property rights theory. The prisoner's dilemma was originally described as a static, noncooperative game with complete information. It is static as it is only played once and is noncooperative, with decisions made simultaneously so that players cannot learn from one another or communicate (McCarty 2000, 326). Weitzman and Xu (1994) let the outcome of a prisoner dilemma game be quantified by the parameter B. This X is valued between zero and one. A high value of X, near one, means a cooperative solution, which comes close to looking as if it were the outcome cooperative collusion. A low value of X, near zero, means a noncooperative solution that is far from the cooperative solution, thus yielding low individual payoffs.1 The parameter X stands for the aBility of a group of people to resolve prisoners' dilemma-type free-riding problems internally, without the inclusion of explicit rules of behavior. With a X value of one, people in a group would be able to resolve free-riding problems completely internally, regardless of the size of the group. With a X value of zero, not even two people, the smallest group of people possible, can resolve the free-riding problems regardless of how much negotiation takes place. With a value of X between zero and one, people would be able to cooperate effectively when a group is sufficiently small, but they may not be able to cooperate as effectively when a group is sufficiently large (Weitzman and Xu 1994, 138). As such, X is the degree of cooperativeness in society's culture.