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Limited memory can be beneficial for the evolution of cooperation

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Author Info

  • Friederike Mengel

    ()
    (Universidad de Alicante)

  • Gergely Horváth

    ()
    (Dpto. Fundamentos del Análisis Económico)

  • Jaromir Kovarik

    (Universidad de Alicante)

Abstract

We study a dynamic process where agents in a network interact in a Prisoner’s Dilemma. The network not only mediates interactions, but also information: agents learn from their own experience and that of their neighbors in the network about the past behavior of others. Each agent can only memorize the last h periods. Evolution selects among three preference types: altruists, defectors and conditional cooperators. We show - relying on simulation techniques - that the probability of reaching a cooperative state does not relate monotonically to the size of memory h. In fact it turns out to be optimal from a population viewpoint that there is a finite bound on agents’ memory capacities. We also show that it is the interplay of local interactions, direct and indirect reputation and memory constraints that is crucial for the emergence of cooperation. Taken by itself, none of these mechanisms is sufficient to yield cooperation.

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File URL: http://www.ivie.es/downloads/docs/wpasad/wpasad-2010-25.pdf
File Function: Fisrt version / Primera version, 2010
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Bibliographic Info

Paper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number 2010-25.

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Length: 32 pages
Date of creation: Jul 2010
Date of revision:
Publication status: Published by Ivie
Handle: RePEc:ivi:wpasad:2010-25

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Keywords: evolution; reputation; bounded memory; cooperation.;

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  1. Ingrid Seinen & Arthur Schram, 2001. "Social Status and Group Norms," Tinbergen Institute Discussion Papers 01-003/1, Tinbergen Institute.
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