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The emergence of reciprocally beneficial cooperation

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This paper offers a new and robust model of the emergence and persistence of cooperation when interactions are anonymous, the population is well-mixed, and the evolutionary process selects strategies according to material payoffs. The model has a Prisoner’s Dilemma structure, but with an outside option of non-participation. The payoff to mutual cooperation is stochastic; with positive probability, it exceeds that from cheating against a cooperator. Under mild conditions, mutually beneficial cooperation occurs in equilibrium. This is possible because the non-participation option holds down the equilibrium frequency of cheating. The dynamics of the model are investigated both theoretically and through simulations.

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  • Sergio Beraldo & Robert Sugden, 2014. "The emergence of reciprocally beneficial cooperation," CSEF Working Papers 368, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    • Handle: RePEc:sef:csefwp:368
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    Cited by:

    1. Sergio Beraldo, 2011. "Good standing and cooperation," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 58(1), pages 79-90, March.
    2. Pamplona da Silva, D.J. & Villar, R.P. & Ramos, L.C., 2017. "Isolation effects in a system of two mutually communicating identical patches," Applied Mathematics and Computation, Elsevier, vol. 315(C), pages 494-499.

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    More about this item

    Keywords

    Cooperation; voluntary participation; random payoffs;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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