A second-order stability analysis for the continuous model of indirect reciprocity

Abstract

Reputation is one of key mechanisms to maintain human cooperation, but its analysis gets complicated if we consider the possibility that reputation does not reach consensus because of erroneous assessment. The difficulty is alleviated if we assume that reputation and cooperation do not take binary values but have continuous spectra so that disagreement over reputation can be analysed in a perturbative way. In this work, we carry out the analysis by expanding the dynamics of reputation to the second order of perturbation under the assumption that everyone initially cooperates with good reputation. The second-order theory clarifies the difference between Image Scoring and Simple Standing in that punishment for defection against a well-reputed player should be regarded as good for maintaining cooperation. Moreover, comparison among the leading eight shows that the stabilizing effect of justified punishment weakens if cooperation between two ill-reputed players is regarded as bad. Our analysis thus explains how Simple Standing achieves a high level of stability by permitting justified punishment and also by disregarding irrelevant information in assessing cooperation. This observation suggests which factors affect the stability of a social norm when reputation can be perturbed by noise.