Stable cooperation emerges in stochastic multiplicative growth

Lorenzo Fant, Onofrio Mazzarisi, Emanuele Panizon and Jacopo Grilli

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Abstract: Understanding the evolutionary stability of cooperation is a central problem in biology, sociology, and economics. There exist only a few known mechanisms that guarantee the existence of cooperation and its robustness to cheating. Here, we introduce a new mechanism for the emergence of cooperation in the presence of fluctuations. We consider agents whose wealth change stochastically in a multiplicative fashion. Each agent can share part of her wealth as public good, which is equally distributed among all the agents. We show that, when agents operate with long time-horizons, cooperation produce an advantage at the individual level, as it effectively screens agents from the deleterious effect of environmental fluctuations.

Date: 2022-02
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Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2202.02787

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