nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2019‒06‒10
three papers chosen by
Matthew Baker
City University of New York

  1. The choice of institutions to solve cooperation problems: A survey of experimental research By Dannenberg, Astrid; Gallier, Carlo
  2. The coevolution of morals under indirect reciprocity By Gaudeul, Alexia; Keser, Claudia; Müller, Stephan
  3. The Persistent Power of Promises By Florian Ederer; Frédéric Schneider

  1. By: Dannenberg, Astrid; Gallier, Carlo
    Abstract: A growing experimental literature studies the endogenous choice of institutions to solve cooperation problems arising in prisoners' dilemmas, public goods games, and common pool resource games. Participants in these experiments have the opportunity to influence the rules of the game before they play the game. In this paper, we review the experimental literature of the last 20 years on the choice of institutions and describe what has been learned about the quality and the determinants of institutional choice. Almost all institutions improve cooperation if they are implemented, but they are not always implemented by the players. Institutional costs, remaining free-riding incentives, and a lack of learning opportunities are the most important barriers. At the individual level, own cooperativeness and beliefs about other players' behavior can be identified as important determinants of institutional choice. Cooperation tends to be higher under endogenously chosen institutions than exogenously imposed institutions. However, a significant share of players fails to implement the institution and they often perform poorly, which is why we cannot conclude that letting people choose is better than enforcing institutions from outside.
    Keywords: literature review,experiments,cooperation,public goods,endogenous institutional choice,voting
    JEL: C71 C91 C92 D02 D70 H41
    Date: 2019
  2. By: Gaudeul, Alexia; Keser, Claudia; Müller, Stephan
    Abstract: We study the coexistence of strategies in the indirect reciprocity game where agents have access to second-order information. We fully characterize the evolutionary stable equilibria and analyze their comparative statics with respect to the cost-benefit ratio (CBR). There are indeed only two stable sets of equilibria enabling cooperation, one for low CBRs involving two strategies and one for higher CBR's which involves two additional strategies. We thereby offer an explanation for the coexistence of different moral judgments among humans. Both equilibria require the presence of second-order discriminators which highlights the necessity for higher-order information to sustain cooperation through indirect reciprocity. In a laboratory experiment, we find that more than 75% of subjects play strategies that belong to the predicted equilibrium set. Furthermore, varying the CBR across treatments leads to changes in the distribution of strategies that are in line with theoretical predictions.
    Keywords: Indirect reciprocity,Cooperation,Evolution,Experiment
    JEL: C73 C91 D83
    Date: 2019
  3. By: Florian Ederer (Cowles Foundation, Yale University); Frédéric Schneider (Yale School of Management)
    Abstract: Using a large-scale hybrid laboratory and online trust experiment with pre-play communication this paper investigates how the passage of time affects trust, trustworthiness, and cooperation. We provide evidence for the persistent power of communication. Even when three weeks pass between messages and actual choices and even when these choices are made outside of the lab, communication (predominantly through the use of promises) raises cooperation, trust, and trustworthiness by about 50 percent. Delays between the beginning of the interaction and the time to reciprocate neither substantially alter trust or trustworthiness nor affect how subjects choose to communicate.
    Keywords: Trust, Promises, Persistence, Trustworthiness, Delay
    JEL: C91 C72 D83
    Date: 2018–04

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