Cooperation and punishment mechanisms in uncertain and dynamic social networks

46 Pages Posted: 16 Jan 2020 Last revised: 1 Mar 2022

See all articles by Edoardo Gallo

Edoardo Gallo

University of Cambridge

Yohanes E. Riyanto

Nanyang Technological University (NTU) - Division of Economics

Nilanjan Roy

City University of Hong Kong (CityU)

Tat-How Teh

Nanyang Technological University (NTU) - Division of Economics

Date Written: December 30, 2019

Abstract

This paper examines experimentally how reputational uncertainty and the rate of change of the social environment determine cooperation. Reputational uncertainty significantly decreases cooperation, while a fast-changing social environment only causes a second-order qualitative increase in cooperation. At the individual level, reputational uncertainty induces more leniency and forgiveness in imposing network punishment through the link proposal and removal processes, inhibiting the formation of cooperative clusters. However, this effect is significant only in the fast-changing environment and not in the slow-changing environment. A substitution pattern between network punishment and action punishment (retaliatory defection) explains this discrepancy across the two social environments.

Keywords: Cooperation, experiments, prisoner's dilemma, uncertainty, repeated games, networks

JEL Classification: C72, C73, C92, D81, D85

Suggested Citation

Gallo, Edoardo and Riyanto, Yohanes E. and Roy, Nilanjan and Teh, Tat-How, Cooperation and punishment mechanisms in uncertain and dynamic social networks (December 30, 2019). Available at SSRN: https://ssrn.com/abstract=3511476 or http://dx.doi.org/10.2139/ssrn.3511476

Edoardo Gallo

University of Cambridge ( email )

Trinity Ln
Cambridge, CB2 1TN
United Kingdom

Yohanes E. Riyanto

Nanyang Technological University (NTU) - Division of Economics ( email )

HSS 04-53, 14 Nanyang Drive
Singapore, 639798
Singapore

Nilanjan Roy (Contact Author)

City University of Hong Kong (CityU) ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong

HOME PAGE: http://https://www.cb.cityu.edu.hk/staff/nilanroy/

Tat-How Teh

Nanyang Technological University (NTU) - Division of Economics ( email )

HSS 04-53, 14 Nanyang Drive
Singapore, 639798
Singapore

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
80
Abstract Views
581
Rank
551,205
PlumX Metrics