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Cooperation Evolution in Random Multiplicative Environments


  • Gur Yaari
  • Sorin Solomon


Most real life systems have a random component: the multitude of endogenous and exogenous factors influencing them result in stochastic fluctuations of the parameters determining their dynamics. These empirical systems are in many cases subject to noise of multiplicative nature. The special properties of multiplicative noise as opposed to additive noise have been noticed for a long while. Even though apparently and formally the difference between free additive vs. multiplicative random walks consists in just a move from normal to log-normal distributions, in practice the implications are much more far reaching. While in an additive context the emergence and survival of cooperation requires special conditions (especially some level of reward, punishment, reciprocity), we find that in the multiplicative random context the emergence of cooperation is much more natural and effective. We study the various implications of this observation and its applications in various contexts.

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  • Gur Yaari & Sorin Solomon, 2008. "Cooperation Evolution in Random Multiplicative Environments," Papers 0807.1823,, revised Jan 2010.
  • Handle: RePEc:arx:papers:0807.1823

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    References listed on IDEAS

    1. Eichengreen, Barry & Rose, Andrew K & Wyplosz, Charles, 1996. "Contagious Currency Crises," CEPR Discussion Papers 1453, C.E.P.R. Discussion Papers.
    2. John Foster & Burkhard Flieth, 2002. "Interactive expectations," Journal of Evolutionary Economics, Springer, vol. 12(4), pages 375-395.
    3. Abhijit V. Banerjee, 1992. "A Simple Model of Herd Behavior," The Quarterly Journal of Economics, Oxford University Press, vol. 107(3), pages 797-817.
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    Cited by:

    1. Jan Lorenz & Fabian Paetzel & Frank Schweitzer, 2012. "Redistribution spurs growth by using a portfolio effect on human capital," Papers 1210.3716,
    2. Jan Lorenz & Fabian Paetzel & Frank Schweitzer, "undated". "Redistribution spurs growth by using a portfolio effect on risky human capital," Working Papers ETH-RC-12-018, ETH Zurich, Chair of Systems Design.

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