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Risk aversion can promote cooperation

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  • Jay Armas
  • Wout Merbis
  • Janusz Meylahn
  • Soroush Rafiee Rad
  • Mauricio J. del Razo

Abstract

Cooperative dynamics are central to our understanding of many phenomena in living and complex systems. However, we lack a universal mechanism to explain the emergence of cooperation. We present a novel framework for modelling social dilemma games with an arbitrary number of players by combining reaction networks, methods from quantum mechanics applied to stochastic complex systems, game theory and stochastic simulations of molecular reactions. Using this framework, we propose a novel and robust mechanism for cooperation based on risk aversion that leads to cooperative behaviour in population games. Rather than individuals seeking to maximise payouts in the long run, individuals seek to obtain a minimum set of resources with a given level of confidence and in a limited time span. We show that this mechanism can lead to the emergence of new equilibria in a range of social dilemma games.

Suggested Citation

  • Jay Armas & Wout Merbis & Janusz Meylahn & Soroush Rafiee Rad & Mauricio J. del Razo, 2023. "Risk aversion can promote cooperation," Papers 2306.05971, arXiv.org, revised Nov 2024.
    • Handle: RePEc:arx:papers:2306.05971
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    References listed on IDEAS

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    5. Wolfram Barfuss & Janusz Meylahn, 2022. "Intrinsic fluctuations of reinforcement learning promote cooperation," Papers 2209.01013, arXiv.org, revised Feb 2023.
    6. William Nordhaus, 2015. "Climate Clubs: Overcoming Free-Riding in International Climate Policy," American Economic Review, American Economic Association, vol. 105(4), pages 1339-1370, April.
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