Naive learning and cooperation in network experiments

In this paper we study learning and cooperation in repeated prisoners' dilemmas experiments. We compare interaction neighbourhoods of different size and structure, we observe choices under different information conditions, and we estimate parameters of a learning model.We find that naive imitation, although a driving force in many models of spatial evolution, may be negligible in the experiment. Naive imitation predicts more cooperation in spatial structures than in spaceless ones—regardless whether interaction neighbourhoods have the same or different sizes in both structures. We find that with some interaction neighbourhoods even the opposite may hold.     

基于博弈论视角的农户合作行为分析

合作是广大分散的小规模经营农户进入市场提高市场谈判地位的有效途径。从农户之间相互作用、相互影响的角度出发,利用博弈模型对农户之间合作的动机和制约因素进行了合理的解释。结果表明:一次性博弈和有限次重复博弈无法使农户摆脱合作失败的困境,无限次重复博弈中合作的达成在现实中很难实现,指出引入激励机制成立农户自愿参加、政府提供服务的合作组织是适合我国国情的农户合作之路。     

Cooperation without Reputation: Experimental Evidence from Prisoner's Dilemma Games

This paper investigates cooperative play in prisoner's dilemma games by designing an experiment to evaluate the ability of two leading theories of observed cooperation: reputation building and altruism. We analyze both one-shot and finitely repeated games to gauge the importance of these theories. We conclude that neither altruism nor reputation building alone can explain our observations. The reputation model is inconsistent with play in both one-shots and finitely repeated games while the model with altruism is unable to explain observed play in the finitely repeated games.Journal of Economic LiteratureClassification Numbers: C72, C92.     

SOCIAL NORMS,LOCAL INTERACTION,AND NEIGHBORHOOD PLANNING*

This article examines optimal social linkage when each individual's repeated interaction with each of his neighbors creates spillovers. Each individual's discount factor is randomly determined. A planner chooses a local interaction network or neighborhood design before the discount factors are realized. Each individual then plays a repeated Prisoner's Dilemma game with his neighbors. A local trigger strategy equilibrium (LTSE) describes an equilibrium in which each individual conditions his cooperation on the cooperation of at least one “acceptable” group of neighbors. Our main results demonstrate a basic trade‐off in the design problem between suboptimal punishment and social conflict. Potentially suboptimal punishment arises in designs with local interactions since in this case monitoring is imperfect. Owing to the heterogeneity of discount factors, however, greater social conflict may arise in more connected networks. When individuals' discount factors are known to the planner, the optimal design exhibits a cooperative “core” and an uncooperative “fringe.”“Uncooperative” (impatient) types are connected to cooperative ones who tolerate their free riding so that social conflict is kept to a minimum. By contrast, when the planner knows only the ex ante distribution over individual discount factors, then in some cases the optimal design partitions individuals into maximally connected cliques (e.g., cul‐de‐sacs), whereas in other cases incomplete graphs with small overlap (e.g., grids) are possible.     

Plausible cooperation

There is a large repeated games literature illustrating how future interactions provide incentives for cooperation. Much of the earlier literature assumes public monitoring. Departures from public monitoring to private monitoring that incorporate differences in players' observations may dramatically complicate coordination and the provision of incentives, with the consequence that equilibria with private monitoring often seem unrealistically complex or fragile. We set out a model in which players accomplish cooperation in an intuitively plausible fashion. Players process information via a mental system – a set of psychological states and a transition function between states depending on observations. Players restrict attention to a relatively small set of simple strategies, and consequently, might learn which perform well.     

PREFERENTIAL TRADE AGREEMENTS AND MULTILATERAL TARIFF COOPERATION*

Are preferential trade agreements (PTAs) building or stumbling blocks for multilateral trade liberalization? I address this question in an infinitely repeated tariff game between three countries engaged in intraindustry trade under oligopoly. The central result is that when countries are symmetric, a free trade agreement (FTA) undermines multilateral tariff cooperation by adversely affecting the cooperation incentive of the nonmember whereas a customs union (CU) does so via its effect on the cooperation incentives of members. However, when countries are asymmetric with respect to either market size or cost, there exist circumstances where PTAs facilitate multilateral tariff cooperation.     

Cooperation in a risky world

We offer a novel investigation of the effect of environmental risk on cooperation in the Voluntary Contribution Mechanism. Our baseline is the standard setting, in which the personal return from the public good is deterministic, homogeneous, and publicly known. Our experimental treatments alter this classic design by making the marginal per capita return from the public good probabilistic. In the homogeneous risk (HomR) treatment, the random draw is made for the whole group, whereas in the heterogeneous risk (HetR) treatment, this happens independently for each group member. Our hypothesis is that different environmental risks may differently affect the ex post payoff inequalities, so that other‐regarding preferences (inequality aversion) may generate higher contributions in HomR than in HetR. Our main result is that the environmental risk does not affect the patterns of cooperation either in the one‐shot or in the finitely repeated version of the game. This suggests that the standard experimental methodology provides a robust and conservative measure of human cooperation.     

Social Economics and Evolutionary Institutionalism Today

This paper discusses theoretical and methodological elements that constitute social economics. It also considers those elements for evolutionary (Veblenian) institutional economics. It investigates how these “heterodoxies” may further converge. Such convergence would probably not trigger a complete unification, but lead to a broadly defined common research program and a strategy for joint “heterodox” survival, in face of the ranking game of the neoclassical “mainstream” and of the dominant powers supporting it as the discipline providing ideological legitimization. A common denominator of “heterodoxies” in terms of real-world orientation, direct interdependency and interaction of agents (social decision situations), appropriate complexity, and the treatment of values is drafted. Theoretical concepts discussed include complex and open systems, individual agency, institutions, embeddedness, networks, social reform, and process orientation. Formal methodological developments considered are complex modeling, game theory, or computer simulations. We arrive at a more formal common basis, which we term socio-economics. We also consider the relations of evolution and institutions, the institutional dichotomy, and the theory of institutional change. The monism of the “market” of the “mainstream” turns out to dissolve into the institutional diversity of real-world network forms, which helps explaining real-world forms of markets, hierarchies, or spatial clusters. Focuses of “heterodox” convergence will have to be the related “microfoundations” and “macrofoundations” projects, integrating an interdisciplinary “naturalistic” approach to genetic-cultural co-evolution of cooperation, and social reform. While modern socio-economics makes “heterodoxies” leading in economic research, their future still appears open between ideological cleansing and extinction through the mainstream, and proactive paradigmatic pluralism.     

Play locally,learn globally: group selection and structural basis of cooperation

In group-structured populations, altruistic cooperation among unrelated group members may be sustainable even when the evolution of behavioral traits is governed by a payoff-based replicator dynamic. This paper explores the importance in this dynamic of two aspects of group structure: global or local interaction in a public goods game and global or local cultural transmission (learning) of behavioral traits. To clarify the underlying dynamic, I derive an extension of the Price equation for the decomposition of changes in the population frequency of a binary trait. I use this to analyze the effect of different structures of interaction and learning on within- and between-group variances of the frequency of cooperative behaviors and thereby on the evolution of cooperation. Of the four population structures given by global/local learning and global/local interaction, local interaction with global learning provides the most favorable environment for the evolution of cooperation. This combination of learning and interaction structures supports a high level of between-group variance in the frequency of cooperative types, so that most cooperators benefit from being in groups composed mostly of cooperators. However, while global learning is essential to the evolution of cooperation, cooperation is more robust when learning is not entirely global because local learning process, ironically, limits the extent to which defectors can free ride on cooperative group members.      

Interbranch cooperation and the shadow of the future

Prisoners’ Dilemma (PD) experiments confirm and extend Axelrod’s (The evolution of cooperation. Basic Books, New York, 1984) Shadow of the Future hypothesis: subjects cooperate in infinitely repeated PD, but they also cooperate until near the end in finitely repeated PD. So the extended hypothesis is that cooperation depends on the probability of continued play. Observational tests of this hypothesis, or even applications, have been rare at best. Here we not only apply but test it for interbranch cooperation under separated-powers constitutions, specifically those of the American states, using the end of governors’ final terms as end points and the rate of overridden vetoes as the extreme case of a breakdown in interbranch cooperation. Controlling for a variety of factors, including divided government, we find support for the hypothesis, whose explanation of interbranch interaction fills a gap left open by Madison’s Federalist 51: how republican government can control itself when what is needed is “energy” more than safeguards.     

R&D COOPERATION BETWEEN IMPATIENT RIVALS

We analyse R&D cooperation between product‐market competitors within a repeated‐game framework with imperfect monitoring. When firms are patient enough, R&D cooperation is attainable without product‐market collusion. However, if firms are less patient, we show that collusion in the product market is necessary to sustain R&D cooperation. Moreover, consumers can be better off when collusion is allowed in this case.     

Not just like starting over - Leadership and revivification of cooperation in groups

We conduct a laboratory experiment to study how, after a history of decay, cooperation in a repeated voluntary contribution game can be revived in an enduring way. Simply starting the repeated game over—a simple fresh start—leads to an initial increase of cooperation, but to a subsequent new decay. Motivated by cooperation decay in organizations we study the potential of three interventions of triggering higher and sustained cooperation, which take place at the same time as a restart. Surprisingly, we find that the detailed explanation of the causes of the decay in cooperation of Fischbacher and Gächter (Am Econ Rev 100:541–556, 2010) combined with an advice on how to prevent decay do not have an effect beyond that of just starting over. In contrast, a one-way free form communication message sent by the leader to the followers strongly revives cooperation. We find evidence that repeated free form communication by the leader further strengthens the reviving effect on cooperation. Combining the two previous interventions does not outperform the pure effect of communication. Our content analysis reveals that leader communication is more people oriented than the expert advice.     

Reciprocity and Cooperation in Repeated Coordination Games: The Principled-Player Approach

Two long-lived players play a repeated coordination game. I show the restrictions on players' beliefs which imply that cooperation is optimal play. Journal of Economic Literature Classification Number: D83.     

Cooperation for Pennies: A Note onε-Equilibria

It is shown that, in finitely repeated smooth games,ε-equilibria are capable of supporting full cooperation up to very near the end of the horizon, with very small amounts of irrationality,ε. Furthermore, behavior, even near the end of the horizon, is highly insensitive to the amount of irrationality assumed.Journal of Economic LiteratureClassification Numbers: C73, L13.     

Cooperation for Pennies: A Note on-Equilibria

It is shown that, in finitely repeated smooth games,-equilibria are capable of supporting full cooperation up to very near the end of the horizon, with very small amounts of irrationality,. Furthermore, behavior, even near the end of the horizon, is highly insensitive to the amount of irrationality assumed.Journal of Economic LiteratureClassification Numbers: C73, L13.     

Feasibility,Stability, and Multiple Research Joint Ventures

We study multiple research joint ventures (RJVs) using a repeated game with imperfect monitoring. Compared with the single joint venture case, we show that cooperation in multiple joint ventures creates two advantages for participating firms. First, by linking decisions together across all joint ventures firms can mitigate the likelihood of cooperation breakdowns following bad R&D outcomes. Second, as the incentive cost to sustain cooperation is independent of the number of joint ventures, the economy of scale effect reduces the efficiency loss due to imperfect monitoring.     

The economics of the smart card industry: Towards coopetitive strategies

This article uses an explorative case study of the smart card industry where ‘coopetition’ is to be found. We show that the nature of interaction between smart card actors, dealing with industry and market conditions that create a very complex competitive landscape, constitutes a mix of competition and cooperation. Here, we assume that the paradoxical aspect of competition and cooperation [Quinn, R.E. and Cameron, K.S. (1988) Paradox and Transformation. Cambridge, MA: Ballinger] can be juxtaposed in order to understand the strategic phenomena characterizing actors' interactions. Actors cooperate in some activities and compete on other ones. Such strategic behaviour is called coopetitive strategy, which is increasingly adopted by high-tech industry players.     

Moral Hazard and Private Monitoring

We clarify the role of mixed strategies and public randomization (sunspots) in sustaining near-efficient outcomes in repeated games with private monitoring. We study a finitely repeated game, where the stage game has multiple equilibria and show that mixed strategies can support partial cooperation, but cannot approximate full cooperation even if monitoring is “almost perfect.” Efficiency requires extensive form correlation, where strategies can condition upon a sunspot at the end of each period. For any finite number of repetitions, we approximate the best equilibrium payoff under perfect monitoring, assuming that monitoring is sufficiently accurate and sunspots are available. Journal of Economic Literature Classification Numbers: C73, D82.     

Endogenous transfers in the Prisoner's Dilemma game: An experimental test of cooperation and coordination

We test a two-stage compensation mechanism for promoting cooperation in Prisoner's Dilemma games. Players first simultaneously choose binding non-negative amounts to pay their counterparts for cooperating, and then play the induced game knowing these amounts. In our games, all payment pairs consistent with mutual cooperation in subgame-perfect equilibrium transform these games into coordination games, with both mutual cooperation and mutual defection as Nash equilibria in the second stage. When endogenous transfer payments are not permitted, cooperation is much less likely. Mutual cooperation is most likely when the (sufficient) payments are identical, and it is also substantially more likely with payment pairs that bring the mutual-cooperation payoffs closer together. Both the Fehr–Schmidt and Charness–Rabin models predict that transfers that make final payoffs closer are preferred; however, they do not explain why equal transfers are particularly effective. Transfers are also effective in sustaining cooperation even when they are imposed and not chosen.     

A resolution of N-person prisoners' dilemma

Summary. The purpose of this paper is to show that cooperation is possible in N-person prisoners' dilemma if players have incomplete information on the order of their moves. We consider a modified version of N-person prisoners' dilemma in which players sequentially move in the order determined by Nature, and during the play they get some information about others. We provide an information partition and a condition of payoffs for which cooperation is attained in an equilibrium. Further, for the case that full cooperation is not attained, we examine the largest partial cooperation which is achieved in an equilibrium. Received: March 5, 1995; revised version August 11, 1996