Cooperation through Imitation and Exclusion in Networks

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Cooperation through Imitation and Exclusion in Networks

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Mengel, Friederike
Fosco, Constanza

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Abstract

We develop a simple model to study the coevolution of interaction structures and action choices in prisoners' dilemma games. Agents are boundedly rational and choose both actions and interaction partners via payoff-biased imitation. The dynamics of imitation and exclusion yields polymorphic outcomes under a wide range of parameters. Whenever agents hold some information beyond their interaction neighbors defectors and cooperators always coexist in disconnected components. Otherwise polymorphic networks can emerge with a center of cooperators and a periphery of defectors. Any stochastically stable state has at most two disconnected components. Simulations confirm our analytical results and show that the share of cooperators increases with the speed at which the network evolves, increases with the radius of interaction and decreases with the radius of information.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 5258.

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Date of creation: 10 Oct 2007
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Handle: RePEc:pra:mprapa:5258

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Find related papers by JEL classification:
C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

This paper has been announced in the following NEP Reports:

NEP-ALL-2007-10-13 (All new papers)
NEP-CBE-2007-10-13 (Cognitive & Behavioural Economics)
NEP-EVO-2007-10-13 (Evolutionary Economics)
NEP-GTH-2007-10-13 (Game Theory)
NEP-SOC-2007-10-13 (Social Norms & Social Capital)

References listed on IDEAS
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Bergin, James & Lipman, Barton L, 1996. "Evolution with State-Dependent Mutations," Econometrica, Econometric Society, vol. 64(4), pages 943-56, July. [Downloadable!] (restricted)
Jackson, Matthew O. & Watts, Alison, 2002. "On the formation of interaction networks in social coordination games," Games and Economic Behavior, Elsevier, vol. 41(2), pages 265-291, November. [Downloadable!] (restricted)
Other versions:
- Matthew O. Jackson & Alison Watts, 2000. "On the Formation of Interaction Networks in Social Coordination Games," Econometric Society World Congress 2000 Contributed Papers 0778, Econometric Society. [Downloadable!]
Goyal, Sanjeev & Vega-Redondo, Fernando, 2005. "Network formation and social coordination," Games and Economic Behavior, Elsevier, vol. 50(2), pages 178-207, February. [Downloadable!] (restricted)
Other versions:
- Sanjeev Goyal & Fernando Vega-Redondo, 2003. "Network Formation and Social Coordination," Working Papers 481, Queen Mary, University of London, Department of Economics. [Downloadable!]
Schlag, Karl H., 1998. "Why Imitate, and If So, How?, : A Boundedly Rational Approach to Multi-armed Bandits," Journal of Economic Theory, Elsevier, vol. 78(1), pages 130-156, January. [Downloadable!] (restricted)
Other versions:
- Karl H. Schlag, 1995. "Why Imitate, and if so, How? A Bounded Rational Approach to Multi-Armed Bandits," Discussion Paper Serie B 361, University of Bonn, Germany, revised Mar 1996. [Downloadable!]
- Schlag, Karl H., 1994. "Why Imitate, and if so, How? Exploring a Model of Social Evolution," Discussion Paper Serie B 296, University of Bonn, Germany. [Downloadable!]
Mengel, Friederike, 2007. "Conformism and Cooperation in a Local Interaction Model," MPRA Paper 4051, University Library of Munich, Germany. [Downloadable!]
Matthew O. Jackson & Brian W. Rogers, 2007. "Meeting Strangers and Friends of Friends: How Random Are Social Networks?," American Economic Review, American Economic Association, vol. 97(3), pages 890-915, June.
Kirchkamp, Oliver & Nagel, Rosemarie, 2007. "Naive learning and cooperation in network experiments," Games and Economic Behavior, Elsevier, vol. 58(2), pages 269-292, February. [Downloadable!] (restricted)

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