The emergence of reciprocally beneficial cooperation

Sergio Beraldo and Robert Sugden

CSEF Working Papers from Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy

Abstract: 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.

Keywords: Cooperation; voluntary participation; random payoffs (search for similar items in EconPapers)
JEL-codes: C73 (search for similar items in EconPapers)
Date: 2014-07-18
New Economics Papers: this item is included in nep-cdm, nep-evo, nep-gth, nep-hpe, nep-mic and nep-soc
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Citations:

Forthcoming in Theory and Decision, Springer

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Related works:
Working Paper: The emergence of reciprocally beneficial cooperation (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:sef:csefwp:368

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