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The institution as a blunt instrument: Cooperation through imperfect observability
Stockholm University, Faculty of Social Sciences, Department of Economics. Harvard University, United States.
Number of Authors: 1
2016 (English)In: Journal of Theoretical Biology, ISSN 0022-5193, E-ISSN 1095-8541, Vol. 396, 182-190 p.Article in journal (Refereed) Published
Abstract [en]

Observing others enables us to indirectly reciprocate their actions. In large societies, however, reliable individual observation is hard to achieve. Societies therefore rely on institutions to aid in observing cooperative behaviour and identifying those who cooperated. Institutions are integral part of modern societies. Here, we propose an evolutionary model in which an institution aims to label cooperators with a tag to verify their trustworthiness, as is the case for financial credit ratings or quality certificates. However, errors in assigning tags inevitably arise: the institution may accidentally leave some cooperators untagged or award tags to some defectors. Taking these two specific types of errors into account, we derive simple analytical conditions under which cooperation becomes stable and is favoured by selection. We find that these two institutional errors are not weighted equally in promoting cooperation: it is more detrimental to cooperation if tags are erroneously awarded to defectors than if they are mistakenly withheld from cooperators. Institutional tagging can lead to non-uniform interaction rates among cooperators and defectors, whereby cooperators benefit disproportionally by playing more games than defectors. This work sheds light on the significant role of institutions in promoting and maintaining societal cooperation.

Place, publisher, year, edition, pages
2016. Vol. 396, 182-190 p.
Keyword [en]
Evolution of cooperation, Prisoners' Dilemma, Evolutionary stability, Non-uniform interaction rates, Institutions, Institutional screening, Imperfect observability
National Category
Economics
Identifiers
URN: urn:nbn:se:su:diva-131204DOI: 10.1016/j.jtbi.2016.02.013ISI: 000375236800016PubMedID: 26907202OAI: oai:DiVA.org:su-131204DiVA: diva2:938812
Available from: 2016-06-17 Created: 2016-06-14 Last updated: 2016-06-17Bibliographically approved

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Ghachem, Montasser
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