A dynamic model of reciprocity with asymmetric equilibrium payoffs
We analyze indirect evolutionary two-player games to identify the dynamic emergence of (strong) reciprocity in a large number of economic settings. The underlying evolutionary environment allows for an arbitrary initial population state provided that every degree of the compact space of reciprocity is adherent to at least one individual of the corresponding continuum population. The basic results, which essentially maintain the evolutionary viability of reciprocity, are, in several directions, context dependent, and minimum valid for the wide class of evolutionary dynamics which hold for regularity and payoff-monotonicity. The evolutionary solution concept which is applied to elevate the explanatory power of emerging Nash equilibria is dominance solvability, in this case, for continuous strategy spaces. An asymmetric aspect comes into play since the actions of the evolutionary players are not only determined by the current state of reciprocity but also by their inherent, context-free preferences towards others which differ among one another devoid of being endogenized in the time span of the dynamic process at hand.
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- Sethi, Rajiv & Somanathan, E., 2003.
Journal of Economic Behavior & Organization,
Elsevier, vol. 50(1), pages 1-27, January.
- Rajiv Sethi & E.Somanathan, 2002. "Understanding reciprocity," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 02-05, Indian Statistical Institute, New Delhi, India.
- Guth, Werner & Schmittberger, Rolf & Schwarze, Bernd, 1982. "An experimental analysis of ultimatum bargaining," Journal of Economic Behavior & Organization, Elsevier, vol. 3(4), pages 367-388, December.
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