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Norm compliance and strong reciprocity

Author

Listed:
  • Rajiv Sethi

    (Columbia University)

  • E. Somanathan

    (Indian Statistical Institute, New Delhi)

Abstract

Strong reciprocity refers to the willingness to sacrifice one's own material self-interest to punish others for opportunistic actions. This propensity provides a decentralized mechanism for the enforcement of social norms, but its extent and persistence poses a theoretical puzzle. Since opportunistic individuals choose optimally to comply with or violate norms based on the likelihood and severity of sanctioning they anticipate, such individuals will always outperform reciprocators within any group. The presence of reciprocators in a group can, however, alter the behavior of opportunists in such a manner as to benefit all members of the group (including reciprocators). We show that under these circumstances, reciprocators can invade a population of opportunists when groups dissolve and are formed anew according to a process of purely random (non-assortative) matching. Furthermore, even when these conditions are not satisfied (so that an opportunistic population is stable) there may exist additional stable population states in which reciprocators are present.

Suggested Citation

  • Rajiv Sethi & E. Somanathan, 2002. "Norm compliance and strong reciprocity," Discussion Papers 02-03, Indian Statistical Institute, Delhi.
    • Handle: RePEc:alo:isipdp:02-03
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    Cited by:

    1. Sethi, Rajiv & Somanathan, E., 2004. "What can we learn from cultural group selection and co-evolutionary models?," Journal of Economic Behavior & Organization, Elsevier, vol. 53(1), pages 105-108, January.
    2. César A.Salazar & Mauricio G.Villena, 2005. "Evolución de preferencias bajo escenarios de información completa e incompleta: teoría y evidencia experimental," Estudios de Economia, University of Chile, Department of Economics, vol. 32(2 Year 20), pages 159-186, December.

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