Second-order Free-riders Research Articles

Sustainable institutionalized punishment requires elimination of second-order free-riders.

Although empirical and theoretical studies affirm that punishment can elevate collaborative efforts, its emergence and stability remain elusive. By peer-punishment the sanctioning is something an individual elects to do depending on the strategies in its neighborhood. The consequences of unsustainable efforts are therefore local. By pool-punishment, on the other hand, where resources for sanctioning are committed in advance and at large, the notion of sustainability has greater significance. In a population with free-riders, punishers must be strong in numbers to keep the “punishment pool” from emptying. Failure to do so renders the concept of institutionalized sanctioning futile. We show that pool-punishment in structured populations is sustainable, but only if second-order free-riders are sanctioned as well, and to a such degree that they cannot prevail. A discontinuous phase transition leads to an outbreak of sustainability when punishers subvert second-order free-riders in the competition against defectors.

Rare but severe concerted punishment that favors cooperation

As one of the mechanisms that are supposed to explain the evolution of cooperation among unrelated individuals, costly punishment, in which altruistic individuals privately bear the cost to punish defection, suffers from such drawbacks as decreasing individuals’ welfare, inducing second-order free riding, the difficulty of catching defection, and the possibility of triggering retaliation. To improve this promising mechanism, here we propose an extended Public Goods game with rare but severe concerted punishment, in which once a defector is caught punishment is triggered and the cost of punishment is equally shared among the remainder of the group. Analytical results show that, when the probability for concerted punishment is above a threshold, cooperating is, while defecting is not, an evolutionarily stable strategy in finite populations, and that this way of punishment can considerably decrease the total cost of inhibiting defection, especially in large populations.

Costs and benefits in hunter-gatherer punishment

Hunter-gatherer punishment involves costs and benefits to individuals and groups, but the costs do not necessarily fit with the assumptions made in models that consider punishment to be altruistic--which brings in the free-rider problem and the problem of second-order free-riders. In this commentary, I present foragers' capital punishment patterns ethnographically, in the interest of establishing whether such punishment is likely to be costly; and I suggest that in many cases abstentions from punishment that might be taken as defections by free-riders are actually caused by social-structural considerations rather than being an effect of free-rider genes. This presentation of data supplements the ethnographic analysis provided by Guala.

Replicator dynamics in public goods games with reward funds

Which punishment or rewards are most effective at maintaining cooperation in public goods interactions and deterring defectors who are willing to freeload on others' contribution? The sanction system is itself a public good and can cause problematic “second-order free riders” who do not contribute to the provisions of the sanctions and thus may subvert the cooperation supported by sanctioning. Recent studies have shown that public goods games with punishment can lead to a coercion-based regime if participation in the game is optional. Here, we reveal that even with compulsory participation, rewards can maintain cooperation within an infinitely large population. We consider three strategies for players in a standard public goods game: to be a cooperator or a defector in a standard public goods game, or to be a rewarder who contributes to the public good and to a fund that rewards players who contribute during the game. Cooperators do not contribute to the reward fund and are therefore classified as second-order free riders. The replicator dynamics for the three strategies exhibit a rock–scissors–paper cycle, and can be analyzed fully, despite the fact that the expected payoffs are nonlinear. The model does not require repeated interaction, spatial structure, group selection, or reputation. We also discuss a simple method for second-order sanctions, which can lead to a globally stable state where 100% of the population are rewarders.

Complexity at large

Complexity at large

Social learning promotes institutions for governing the commons

Theoretical and empirical research highlights the role of punishment in promoting collaborative efforts. However, both the emergence and the stability of costly punishment are problematic issues. It is not clear how punishers can invade a society of defectors by social learning or natural selection, or how second-order free-riders (who contribute to the joint effort but not to the sanctions) can be prevented from drifting into a coercion-based regime and subverting cooperation. Here we compare the prevailing model of peer-punishment with pool-punishment, which consists in committing resources, before the collaborative effort, to prepare sanctions against free-riders. Pool-punishment facilitates the sanctioning of second-order free-riders, because these are exposed even if everyone contributes to the common good. In the absence of such second-order punishment, peer-punishers do better than pool-punishers; but with second-order punishment, the situation is reversed. Efficiency is traded for stability. Neither other-regarding tendencies or preferences for reciprocity and equity, nor group selection or prescriptions from higher authorities, are necessary for the emergence and stability of rudimentary forms of sanctioning institutions regulating common pool resources and enforcing collaborative efforts.

Evolutionary establishment of moral and double moral standards through spatial interactions.

Situations where individuals have to contribute to joint efforts or share scarce resources are ubiquitous. Yet, without proper mechanisms to ensure cooperation, the evolutionary pressure to maximize individual success tends to create a tragedy of the commons (such as over-fishing or the destruction of our environment). This contribution addresses a number of related puzzles of human behavior with an evolutionary game theoretical approach as it has been successfully used to explain the behavior of other biological species many times, from bacteria to vertebrates. Our agent-based model distinguishes individuals applying four different behavioral strategies: non-cooperative individuals (“defectors”), cooperative individuals abstaining from punishment efforts (called “cooperators” or “second-order free-riders”), cooperators who punish non-cooperative behavior (“moralists”), and defectors, who punish other defectors despite being non-cooperative themselves (“immoralists”). By considering spatial interactions with neighboring individuals, our model reveals several interesting effects: First, moralists can fully eliminate cooperators. This spreading of punishing behavior requires a segregation of behavioral strategies and solves the “second-order free-rider problem”. Second, the system behavior changes its character significantly even after very long times (“who laughs last laughs best effect”). Third, the presence of a number of defectors can largely accelerate the victory of moralists over non-punishing cooperators. Fourth, in order to succeed, moralists may profit from immoralists in a way that appears like an “unholy collaboration”. Our findings suggest that the consideration of punishment strategies allows one to understand the establishment and spreading of “moral behavior” by means of game-theoretical concepts. This demonstrates that quantitative biological modeling approaches are powerful even in domains that have been addressed with non-mathematical concepts so far. The complex dynamics of certain social behaviors become understandable as the result of an evolutionary competition between different behavioral strategies.

Collective Action, Rival Incentives, and the Emergence of Antisocial Norms

Centralized sanctions (selective incentives) and informal norms have been advanced as distinct solutions to collective action problems. This article investigates their interaction, modeling the emergence of norms in the presence of incentives to contribute to collective goods. Computational experiments show how collective action depends on a three-way interaction among the value of incentives, the rivalness of incentives (ranging from independence to zero-sum competition), and group cohesiveness (effectiveness of peer influence). This investigation shows a broad range of conditions in which social norms promote the collective good and thus peer influence complements a centralized regime of selective incentives. It also shows conditions in which the two systems clash because incentives lead to antisocial norms that discourage contributions to collective goods. In these conditions, social scientists must reconsider the widely predicted relationships of collective action to selective incentives, group cohesiveness, and second-order free riding.

Second-order free-riding problem solved?

Panchanathan and Boyd describe a model of indirect reciprocity in which mutual aid among cooperators can promote large-scale human cooperation without succumbing to a second-order free-riding problem (whereby individuals receive but do not give aid). However, the model does not include second-order free riders as one of the possible behavioural types. Here I present a simplified version of their model to demonstrate how cooperation unravels if second-round defectors enter the population, and this shows that the free-riding problem remains unsolved.

Fehr on Altruism, Emotion, and Norms

Abstract I discuss recent work by Ernst Fehr and his collaborators on cooperation and reciprocity. (i) Their work demonstrates conclusively the reality and importance of non-self-interested motivations. (ii) It allows for a useful distinction between trust and blind trust. (iii) It points to a category of quasi-moral norms, distinct both from social norms and moral norms. (iv) It demonstrates how social interactions can generate irrational belief formation. (v) It shows the potential of punishment for sustaining social norms and for overcoming the second-order free rider problem as well as obstacles to group selection. (vi) It offers a provocative experimental basis for the ‘warm-glow’ explanation of altruistic behavior. I conclude by suggesting some experiments that might allow for further developments of the theory.

Indirect reciprocity can stabilize cooperation without the second-order free rider problem

Models of large-scale human cooperation take two forms. 'Indirect reciprocity' occurs when individuals help others in order to uphold a reputation and so be included in future cooperation. In 'collective action', individuals engage in costly behaviour that benefits the group as a whole. Although the evolution of indirect reciprocity is theoretically plausible, there is no consensus about how collective action evolves. Evidence suggests that punishing free riders can maintain cooperation, but why individuals should engage in costly punishment is unclear. Solutions to this 'second-order free rider problem' include meta-punishment, mutation, conformism, signalling and group-selection. The threat of exclusion from indirect reciprocity can sustain collective action in the laboratory. Here, we show that such exclusion is evolutionarily stable, providing an incentive to engage in costly cooperation, while avoiding the second-order free rider problem because punishers can withhold help from free riders without damaging their reputations. However, we also show that such a strategy cannot invade a population in which indirect reciprocity is not linked to collective action, thus leaving unexplained how collective action arises.

Rock-scissors-paper and the survival of the weakest.

In the children's game of rock-scissors-paper, players each choose one of three strategies. A rock beats a pair of scissors, scissors beat a sheet of paper and paper beats a rock, so the strategies form a competitive cycle. Although cycles in competitive ability appear to be reasonably rare among terrestrial plants, they are common among marine sessile organisms and have been reported in other contexts. Here we consider a system with three species in a competitive loop and show that this simple ecology exhibits two counter-intuitive phenomena. First, the species that is least competitive is expected to have the largest population and, where there are oscillations in a finite population, to be the least likely to die out. As a consequence an apparent weakening of a species leads to an increase in its population. Second, evolution favours the most competitive individuals within a species, which leads to a decline in its population. This is analogous to the tragedy of the commons, but here, rather than leading to a collapse, the 'tragedy' acts to maintain diversity.

Social Relations and Cooperation in Organizations

The paper addresses the effects of social relations on cooperation (or collusion) in organizations and communities. and production relations are modeled as separate repeated strategic interactions. Linking them--by employing members of the same community or by encouraging social interaction between employees--is shown to facilitate cooperation in production: (a) because of available Social Capital, the slack of net expected gains from cooperation in the social relations which can be credibly transferred to discipline behavior in the workplace; (b) because payoffs from the social and production relations tend to be substitutes, in which case the linkage of more relations endogenously generates (a sort of increasing returns in cooperation); (c) because the linkage generates transfers of trust, reputation spillovers from a cooperative social background to newly started production relations; and (d) because agents who share social relations have access to additional information about each other's situations. The model provides a microfoundation for Putnam's concept of Social Capital and for Granovetter's idea of embeddedness for the employment relation. It shows that Kandel and Lazear's peer pressures are a credible effort-enforcing mechanism even when teams' members are fully self-interested, and that the threat of social sanctions can credibly enforce social norms independent of agents' moral constraints (that is, no second-order free rider problem exists). It provides an explanation for Japanese firms' investments in employees' free-time activities, for the Grameen Bank's requirement that group members belong to the same village and participate in social activities, for the ambiguous empirical results on the effectiveness of group-incentives, for markets' tendency to crowd out cooperative institutions, and for the sudden breakdown in trust and cooperation observed in communities after a war ends and peace is established.