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Norm compliance and strong reciprocity

  • Rajiv Sethi

    ()

    (Columbia University)

  • E. Somanathan

    ()

    (Indian Statistical Institute, New Delhi)

Strong reciprocity refers to the willingness to sacrifice one's own material self-interest to punish others for opportunistic actions. This propensity provides a decentralized mechanism for the enforcement of social norms, but its extent and persistence poses a theoretical puzzle. Since opportunistic individuals choose optimally to comply with or violate norms based on the likelihood and severity of sanctioning they anticipate, such individuals will always outperform reciprocators within any group. The presence of reciprocators in a group can, however, alter the behavior of opportunists in such a manner as to benefit all members of the group (including reciprocators). We show that under these circumstances, reciprocators can invade a population of opportunists when groups dissolve and are formed anew according to a process of purely random (non-assortative) matching. Furthermore, even when these conditions are not satisfied (so that an opportunistic population is stable) there may exist additional stable population states in which reciprocators are present.

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File URL: http://www.isid.ac.in/~pu/dispapers/dp02-03.pdf
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Paper provided by Indian Statistical Institute, New Delhi, India in its series Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers with number 02-03.

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Length: 20 pages
Date of creation: 2002
Date of revision:
Handle: RePEc:ind:isipdp:02-03
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  2. Axel Ockenfels & Gary E. Bolton, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March.
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  18. Guth, Werner, 1995. "An Evolutionary Approach to Explaining Cooperative Behavior by Reciprocal Incentives," International Journal of Game Theory, Springer, vol. 24(4), pages 323-44.
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