Skip to main content

Endogenizing Conditions for Cooperation of Rational Egoists

  • 156 Accesses

Abstract

Repeated interactions can foster cooperation of rational and purely self-interested actors in social dilemmas. Given these effects, actors also have incentives to invest in the formation of relations that involve repeated interactions. This chapter provides results on conditions for equilibria that imply mutual cooperation (‘effects of repeated interactions’) and also imply that such relations with repeated interactions are established in the first place. The new feature is that the results cover a reasonably broad class of social dilemma games.

Keywords

  • Game theory
  • Problem of social order
  • Rational egoists
  • Repeated interactions
  • Social dilemmas

This is a preview of subscription content, access via your institution.

Buying options

Chapter
USD   29.95
Price excludes VAT (USA)
  • DOI: 10.1007/978-3-658-33536-6_10
  • Chapter length: 19 pages
  • Instant PDF download
  • Readable on all devices
  • Own it forever
  • Exclusive offer for individuals only
  • Tax calculation will be finalised during checkout
eBook
USD   59.99
Price excludes VAT (USA)
  • ISBN: 978-3-658-33536-6
  • Instant PDF download
  • Readable on all devices
  • Own it forever
  • Exclusive offer for individuals only
  • Tax calculation will be finalised during checkout
Softcover Book
USD   74.99
Price excludes VAT (USA)
Fig. 1

(source: own research)

Fig. 2

(source: own research)

Notes

  1. 1.

    Voss (2020) is a sound discussion of various pros and cons of the RE model.

  2. 2.

    I remember very well that Thomas and I, as students and studying together, encountered Taylor’s book first of all in a seminar taught by Hans J. Hummell in the second half of the 1970s—one of Hummell’s outstanding Wednesday afternoon seminars we regularly attended together over a period of several semesters. Hummell and Hartmut Esser were important academic teachers in sociology for both of us during our student days.

  3. 3.

    We use ‘he’, ‘his’ for readability and without intending gender bias.

  4. 4.

    We address core features of the game-theoretic model. See a textbook such as Rasmusen (1994) for details on game-theoretic concepts and assumptions that are employed in our analysis. Appendix A provides a summary of our notation and assumptions.

  5. 5.

    Given our assumptions, two games G are played in each round \(\mathrm{2,3},\dots \) of \(\Gamma ^{{one - shot}}\), one involving actor 1, the other involving actor 2. We do not need to further specify in which sequence these two games are played per round.

  6. 6.

    Given our cost sharing institutions, Γ has one subgame \(\Gamma ^{{repeated}}\) and three subgames \(\Gamma ^{{one}{\text -}{shot}}\).

  7. 7.

    Recall that we interpret payoffs as cardinal utilities. Note, too, that the model includes discounting of future payoffs due to the probability that Γ might end and that we neglect negative time preferences. It would be no problem to include negative time preferences and results would remain robust.

  8. 8.

    We assume a noncooperative game precisely because we wish to specify conditions such that rational actors will cooperate without external enforcement in social dilemmas, based exclusively on the embeddedness of the dilemma in a long-term relation.

References

  • Axelrod, R. 1984. The evolution of cooperation. New York: Basic Books.

    Google Scholar 

  • Bramoullé, Y., A. Galeotti, and B. Rogers, eds. 2016. The Oxford handbook of the economics of networks. Oxford: Oxford University Press.

    Google Scholar 

  • Brown, M., A. Falk, and E. Fehr. 2004. Relational contracts and the nature of market interactions. Econometrica 72:747–780.

    CrossRef  Google Scholar 

  • Buskens, V., and W. Raub. 2002. Embedded trust: Control and learning. Advances in Group Processes 19:167–202.

    CrossRef  Google Scholar 

  • Buskens, V., and W. Raub. 2013. Rational choice research on social dilemmas. In Handbook of rational choice social research, ed. R. Wittek, T.A.B. Snijders, and V. Nee, 113–150. Stanford: Stanford University Press.

    Google Scholar 

  • Coleman, J.S. 1964. Collective decisions. Sociological Inquiry 34 (Spring):166–181.

    CrossRef  Google Scholar 

  • Coleman, J.S. 1986. Social theory, social research, and a theory of action. American Journal of Sociology 91:1309–1335.

    CrossRef  Google Scholar 

  • Coleman, J.S. 1988. Social capital in the creation of human capital. American Journal of Sociology 94:S95–S120.

    CrossRef  Google Scholar 

  • Dal Bó, P., and G. Fréchette. 2018. On the determinants of cooperation in infinitely repeated games: A survey. Journal of Economic Literature 56:60–114.

    CrossRef  Google Scholar 

  • DiMaggio, P., and H. Louch. 1998. Socially embedded consumer transactions: For what kinds of purchases do people most often use networks? American Sociological Review 63:619–637.

    CrossRef  Google Scholar 

  • Frey, V. 2017. Boosting trust by facilitating communication: A model of trustee investments in information sharing. Rationality and Society 29:471–503.

    CrossRef  Google Scholar 

  • Frey, V., V. Buskens, and R. Corten. 2019. Investments in and returns on network embeddedness: An experiment with trust games. Social Networks 56:81–92.

    CrossRef  Google Scholar 

  • Frey, V., V. Buskens, V., and W. Raub. 2015. Embedding trust: A game-theoretic model for investments in and returns on social capital. Journal of Mathematical Sociology 39:39–72.

    Google Scholar 

  • Frey, V., and A. Van de Rijt. 2016. Arbitrary inequality in reputation systems. Nature Scientific Reports 6:38304.

    CrossRef  Google Scholar 

  • Friedman, J.W. 1990. Game theory with applications to economics, 2nd ed. New York: Oxford University Press.

    Google Scholar 

  • Fudenberg, D., and E. Maskin. 1986. The folk theorem in repeated games with discounting or with incomplete information. Econometrica 54:533–554.

    CrossRef  Google Scholar 

  • Jackson, M.O. 2008. Social and economic networks. Princeton: Princeton University Press.

    CrossRef  Google Scholar 

  • Jackson, M.O., and Y. Zenou, eds. 2013. Economic analyses of social networks. London: Edward Elgar.

    Google Scholar 

  • Kliemt, H. 1986. Antagonistische Kooperation. Elementare spieltheoretische Modelle spontaner Ordnungsentstehung. Freiburg: Alber.

    Google Scholar 

  • Kollock, P. 1994. The emergence of exchange structures: An experimental study of uncertainty, commitment, and trust. American Journal of Sociology 100:313–345.

    CrossRef  Google Scholar 

  • North, D.C. 1990. Institutions, institutional change and economic performance. Cambridge: Cambridge University Press.

    CrossRef  Google Scholar 

  • Rasmusen, E. 1994. Games and information: An introduction to game theory, 2nd ed. Oxford: Blackwell.

    Google Scholar 

  • Raub, W., V. Buskens, and V. Frey. 2013. The rationality of social structure. Social Networks 35:720–732.

    CrossRef  Google Scholar 

  • Raub, W., V. Buskens, and V. Frey. 2019. Strategic tie formation for long-term exchange relations. Rationality and Society 31:490–510.

    CrossRef  Google Scholar 

  • Raub, W., and T. Voss. 1986a. Die Sozialstruktur der Kooperation rationaler Egoisten. Zeitschrift für Soziologie 15:309–323.

    CrossRef  Google Scholar 

  • Raub, W., and T. Voss. 1986b. Conditions for cooperation in problematic social situations. In Paradoxical effects of social behavior. Essays in honor of Anatol Rapoport, ed. A. Diekmann and P. Mitter, 85–103. Heidelberg: Physica.

    CrossRef  Google Scholar 

  • Raub, W., and J. Weesie. 1990. Reputation and efficiency in social interactions: An example of network effects. American Journal of Sociology 96:626–654.

    CrossRef  Google Scholar 

  • Rosenthal, R.W. 1981. Games of perfect information, predatory pricing and the chain-store paradox. Journal of Economic Theory 25:92–100.

    CrossRef  Google Scholar 

  • Schotter, A. 1981. The economic theory of social institutions. Cambridge: Cambridge University Press.

    CrossRef  Google Scholar 

  • Sokolova, A., V. Buskens, and W. Raub. 2021. Cooperation through investments in repeated interactions and contractual agreements: An experimental study. Mimeo: Utrecht University.

    Google Scholar 

  • Taylor, M. 1976. Anarchy and cooperation. London: Wiley. Rev. ed.: The possibility of cooperation. Cambridge: Cambridge University Press 1987.

    Google Scholar 

  • Voss, T. 1982. Rational actors and social institutions: The case of the organic emergence of norms. In Theoretical models and empirical analyses. Contributions to the explanation of individual action and collective phenomena, ed. W. Raub, 76–100. Utrecht: ESP.

    Google Scholar 

  • Voss, T. 1985. Rationale Akteure und soziale Institutionen: Beitrag zu einer endogenen Theorie des sozialen Tauschs. München: Oldenbourg.

    CrossRef  Google Scholar 

  • Voss, T. 1990. Eine individualistische Theorie der Evolution von Regeln und einige Anwendungsmöglichkeiten in der Organisationsforschung. Habilitationsschrift: Universität München.

    Google Scholar 

  • Voss, T. 2001. Game theoretical perspectives on the emergence of social norms. In Social norms, ed. M. Hechter and K.-D. Opp, 105–136. New York: Russell Sage.

    Google Scholar 

  • Voss, T. 2003. The rational choice approach to an analysis of intra- and interorganizational governance. Research in the Sociology of Organizations 20:21–46.

    CrossRef  Google Scholar 

  • Voss, T. 2020. Institutional design and human motivation: The role of homo economicus assumptions. In Advances in the sociology of trust and cooperation, ed. V. Buskens, R. Corten, and C. Snijders, 15–40. Berlin: De Gruyter.

    CrossRef  Google Scholar 

Download references

Acknowledgments

The chapter is part of a research line on which I am collaborating with Vincent Buskens and Vincenz Frey since quite some time and with much pleasure. Discussions with Vincent and Vincenz and their contributions, including comments on this chapter, are gratefully acknowledged. I can hardly claim that all remaining errors in the present chapter are exclusively mine. As the chapter makes clear, I likewise build on joint work with Thomas Voss in an early phase of our academic careers.

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Werner Raub .

Editor information

Editors and Affiliations

Appendix A

Appendix A

(See Table A1 ).

Table A1 Notation and Assumptions

Rights and permissions

Reprints and Permissions

Copyright information

© 2021 The Author(s), under exclusive license to Springer Fachmedien Wiesbaden GmbH, part of Springer Nature

About this chapter

Verify currency and authenticity via CrossMark

Cite this chapter

Raub, W. (2021). Endogenizing Conditions for Cooperation of Rational Egoists. In: Krumpal, I., Raub, W., Tutić, A. (eds) Rationality in Social Science. Springer VS, Wiesbaden. https://doi.org/10.1007/978-3-658-33536-6_10

Download citation

  • DOI: https://doi.org/10.1007/978-3-658-33536-6_10

  • Published:

  • Publisher Name: Springer VS, Wiesbaden

  • Print ISBN: 978-3-658-33535-9

  • Online ISBN: 978-3-658-33536-6

  • eBook Packages: Social SciencesSocial Sciences (R0)