The emergence of cooperation in the loss domain

The development of cooperative norms is one of the most important determinants of the success of human groups. An important literature has identified the conditions under which such cooperative norms are most likely to emerge. This literature mostly focuses on situations where cooperation generates benefits. However, in many important situations, cooperation helps avoid, or minimize social losses rather than generating benefits. Such situations include public health, climate change mitigation efforts, or disaster responses where failure to cooperate leads to substantial losses. In addition, it is well-established that individual decision making is different when dealing with gains and losses, therefore, the development of cooperative norms might widely differ depending on whether cooperation generates gains or minimizes losses. I experimentally study the emergence of cooperation norms in the loss domain using an infinitely-repeated prisoner's dilemma with partner matching. In different treatments, I vary two dimensions. First, I vary the game's parameters (payoff to mutual cooperation and the expected length of interactions) to create combinations where cooperation is (i) not feasible in equilibrium, (ii) feasible but rarely observed in past experiments, and (iii) feasible and often observed in past experiments. Second, I vary the decision frame: the "gain" frame corresponds to the standard implementation of the game, while in the "loss" frame, payoffs are negative, and the stage-payoff is deducted from an initial endowment. Importantly, the loss frame preserves the same expected payoff as the gain frame for any given strategy. I first replicate past findings on the relationship between game parameters and the emergence of cooperation. I then show that loss framing elicits higher cooperation rates across all payoff parameters. I then analyze individual strategies, and find that participants are more stringent in the loss domain: they attempt cooperation more often but sanction defection more strongly, and do not resume cooperation easily after facing defection.