Direct Reciprocity and Model-Predictive Strategy Update Explain the Network Reciprocity Observed in Socioeconomic Networks

Fabio Della Rossa, Fabio Dercole and Anna Di Meglio
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Fabio Della Rossa: Department of Electronics, Information, and Bioengineering, Politecnico di Milano, 20133 Milan, Italy
Fabio Dercole: Department of Electronics, Information, and Bioengineering, Politecnico di Milano, 20133 Milan, Italy
Anna Di Meglio: Department of Electrical Engineering and Information Technology, Universita’ degli studi di Napoli, Federico II, 80125 Naples, Italy

Games, 2020, vol. 11, issue 1, 1-28

Abstract: Network reciprocity has been successfully put forward (since M. A. Nowak and R. May’s, 1992, influential paper) as the simplest mechanism—requiring no strategical complexity—supporting the evolution of cooperation in biological and socioeconomic systems. The mechanism is actually the network, which makes agents’ interactions localized, while network reciprocity is the property of the underlying evolutionary process to favor cooperation in sparse rather than dense networks. In theoretical models, the property holds under imitative evolutionary processes, whereas cooperation disappears in any network if imitation is replaced by the more rational best-response rule of strategy update. In social experiments, network reciprocity has been observed, although the imitative behavior did not emerge. What did emerge is a form of conditional cooperation based on direct reciprocity—the propensity to cooperate with neighbors who previously cooperated. To resolve this inconsistency, network reciprocity has been recently shown in a model that rationally confronts the two main behaviors emerging in experiments—reciprocal cooperation and unconditional defection—with rationality introduced by extending the best-response rule to a multi-step predictive horizon. However, direct reciprocity was implemented in a non-standard way, by allowing cooperative agents to temporarily cut the interaction with defecting neighbors. Here, we make this result robust to the way cooperators reciprocate, by implementing direct reciprocity with the standard tit-for-tat strategy and deriving similar results.

Keywords: direct reciprocity; evolutionary game theory; model-predictive strategy update; network reciprocity; prisoner’s dilemma; tit-for-tat (search for similar items in EconPapers)
JEL-codes: C C7 C70 C71 C72 C73 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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