We present and analyze a local interaction model where agents play a bilateral prisoner's dilemma game with their neighbors. Agents learn about behavior through payoff-biased imitation of their interaction neighbors (and possibly some agents beyond this set). We find that the [Eshel, I., L. Samuelson and A. Shaked, 1998, Altruists, Egoists and Hooligans in a Local Interaction Model, Am. Econ. Rev 88] result that polymorphic states are stochastically stable in such a setting is not robust. In particular whenever agents use information also of some agents beyond their interaction neighbors the unique stable outcome is one where everyone chooses defection. Introducing a sufficiently strong conformist bias into the imitation process we find that full cooperation always emerges. Conformism is thus identified as a new mechanism that can stabilize cooperation.
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number
4051.
Find related papers by JEL classification: C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
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