Cooperation versus Competition

Martin A. Nowak, Karl Sigmund and Martin L. Leibowitz

Financial Analysts Journal, 2000, vol. 56, issue 4, 13-22

Abstract: Three models of reciprocity are discussed that are grounded in the idea that cooperation is no less crucial for human evolution than competition and survival of the fittest. Darwin's theory of evolution is based on competition and survival of the fittest. It does not easily account for altruistic behavior. Yet, many animals, most notably humans, engage in cooperative interactions. Indeed, the emergence of cooperative behavior was a crucial step for the evolution of human societies.Theories of cooperation are based on kin selection, group selection, and reciprocal altruism. We present three frameworks for the evolution of reciprocal altruism: (1) direct reciprocity, (2) spatial reciprocity, and (3) indirect reciprocity.Direct reciprocity is based on the idea that repeated encounters between the same individuals allow for the return of an altruistic act by the recipient. The standard way to formulate direct reciprocity is in terms of the iterated Prisoner's Dilemma. One of the best strategies for this game is “Tit for Tat”. We discuss the strengths and weaknesses of TFT and show that in evolutionary settings, TFT is often outcompeted by other strategies. Examples are Generous TFT, a more forgiving variant of TFT, and win-stay, lose-shift. The win-stay, lose-shift strategy follows a completely different pattern from the TFT strategies, but the pattern is still simple: Stay with your move whenever you are doing well; change your move whenever you are not doing well.Another possible mechanism for the emergence and stability of cooperation is spatial reciprocity. Players occupy cells on spatial grids and interact with their nearest neighbors. Simple rules of these spatial games can lead to enormously complex behaviors. Cooperators and defectors can coexist indefinitely in ever-changing chaotic patterns in time and space.Finally, we present a theoretical framework developed more recently than the other two, one that is based on indirect reciprocity and does not require the same two individuals ever to meet again. Natural selection can favor cooperative strategies directed toward recipients that have helped others in the past. Cooperation pays because it confers the reputation on the player of being a valuable community member. We discuss computer simulations and models to specify the conditions for the evolutionary stability of indirect reciprocity. In particular, we show that the probability of knowing the reputation of the recipient must exceed the cost-to-benefit ratio of the altruistic act.

Date: 2000
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DOI: 10.2469/faj.v56.n4.2370

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