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Indirect Reciprocity, Golden Opportunities for Defection, and Inclusive Reputation

Author

Listed:
  • Hannes Rusch

    () (University of Giessen)

  • Max Albert

    (University of Munich)

Abstract

In evolutionary models of indirect reciprocity, reputation mechanisms can stabilize cooperation even in severe cooperation problems like the prisoner’s dilemma. Under certain circumstances, conditionally cooperative strategies, which cooperate iff their partner has a good reputation, cannot be invaded by any other strategy that conditions behavior only on own and partner reputation. The first point of this paper is to show that an evolutionary version of backward induction can lead to a breakdown of this kind of indirectly reciprocal cooperation. Backward induction, however, requires trategies that count and then cease to cooperate in the last, last but one, last but two, game they play. These strategies are unlikely to exist in natural settings. We then present two new findings. (1) Surprisingly, the same kind of breakdown is also possible without counting. Strategies using rare golden opportunities for defection can invade conditional cooperators. This can create further golden opportunities, inviting the next wave of opportunists, and so on, until cooperation breaks down completely. (2) Cooperation can be stabilized against these opportunists, by letting an individual’s initial reputation be inherited from that individual’s parent. This ‘inclusive reputation’ mechanism can cope with any observably opportunistic strategy. Offspring of opportunists who successfully exploited a conditional cooperator cannot repeat their parents’ success because they inherit a bad reputation, which forewarns conditional cooperators in later generations.

Suggested Citation

  • Hannes Rusch & Max Albert, 2013. "Indirect Reciprocity, Golden Opportunities for Defection, and Inclusive Reputation," MAGKS Papers on Economics 201329, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  • Handle: RePEc:mar:magkse:201329
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    File URL: http://www.uni-marburg.de/fb02/makro/forschung/magkspapers/29-2013_albert.pdf
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    References listed on IDEAS

    as
    1. Ananish Chaudhuri & Sara Graziano & Pushkar Maitra, 2006. "Social Learning and Norms in a Public Goods Experiment with Inter-Generational Advice -super-1," Review of Economic Studies, Oxford University Press, vol. 73(2), pages 357-380.
    2. Joseph Henrich & Steve J. Heine & Ara Norenzayan, 2010. "The Weirdest People in the World?," Working Paper Series of the German Council for Social and Economic Data 139, German Council for Social and Economic Data (RatSWD).
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    evolutionary game theory; repeated prisoner’s dilemma; backward induction; conditional cooperation; opportunism;

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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