Abstract
We study the evolution of cooperation in a model of indirect reciprocity where people interact in public and private situations. Public interactions have a high chance to be observed by others and always affect reputation. Private interactions have a lower chance to be observed and only occasionally affect reputation. We explore all second order social norms and study conditions for evolutionary stability of action rules. We observe the competition between “honest” and “hypocritical” strategies. The former cooperate both in public and in private. The later cooperate in public, where many others are watching, but try to get away with defection in private situations. The hypocritical idea is that in private situations it does not pay-off to cooperate, because there is a good chance that nobody will notice it. We find simple and intuitive conditions for the evolution of honest strategies.
Highlights
Most human interactions occur in situations where repetition is possible and reputation is at stake
If b=c > q=q CDCD is evolutionarily stable strategy (ESS); this is the crucial condition for the evolution of an honest strategy
Social norms that support the evolutionary stability of CDCD turn out to be the combinations of “Simple-Standing”, “Kandori”, and “Shunning” social norms [15, 19, 21]
Summary
Most human interactions occur in situations where repetition is possible and reputation is at stake. Repeated interactions in a group of players facilitate evolution of cooperation via indirect reciprocity [1, 2]: here players use conditional strategies that depend on what has happened. Cooperation is costly but can establish a good reputation. Others might preferentially cooperate with those who have a good reputation. Many studies explore theoretical [3– 49] and empirical [50–70] aspects of indirect reciprocity. Experiments reveal that people help those who help others [50, 52–57, 59, 60, 62–67, 70]. Reputation is a strong driving force of prosocial behavior [54, 61, 71–80]. Internet commerce is based to a large extent on reputation systems: buyers are sensitive to sellers’ reputation [76, 81–87]
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