Variation In Payoffs Research Articles

The role of payoff parameters for cooperation in the one-shot Prisoner's Dilemma

The Prisoner's Dilemma is arguably the most important model of social dilemmas, but our knowledge about how its material payoff structure affects cooperation is incomplete. We investigate the effect of variation in material payoffs on cooperation in one-shot Prisoner's Dilemma games. We report results from three experiments (N = 1,993): in a preliminary experiment, we vary the payoffs over a large range. In our first main experiment (Study 1), we present a novel design that varies payoffs orthogonally in a within-subjects design. Our second main experiment, Study 2, investigates the orthogonal variation of payoffs in a between-subjects design. In a complementary analysis we also study the closely related payoff indices of normalized loss and gain, and the K-index. A robust finding of our experiments is that cooperation increases with the gains of mutual cooperation over mutual defection.

Coordinated Heat and Power Dispatch Considering Mutual Benefit and Mutual Trust: A Multi-party Perspective

Coordinated heat and power dispatch has attracted increasing attention due to its flexibility support for renewable energy accommodation. Different from most conventional studies that regard coordination as holistic optimization, in which power systems monopolize the additional payoff brought by coordination while heating systems suffer from higher heat supply costs, this work considers coordinated dispatch from a novel multi-party perspective to ensure the privacy protection, mutual benefit, and mutual trust of all participants. Based on the existing works that address the privacy issue well, we propose a transfer payment strategy to ensure that both heating systems and power systems benefit from coordinated dispatch. The calculation of transfer payments is performed through a parametric programming method, which discloses only the payoff variation and maintains the privacy of the payoff itself. Finally, a critical region tracking method is developed to confirm the authenticity of the information exchanged between power systems and heating systems, which prevents possible defrauding. Numerical tests indicate that our proposed approach achieves the mutual benefit of both systems in coordinated dispatch and detects inauthentic information effectively to ensure mutual trust.

Mortgage payments and household consumption in urban China

By exploiting variation both in mortgage payoffs and mortgage interest-rate resets, we find that a decline in mortgage payments induces a significant increase in nondurable goods spending, even when households have substantial amounts of liquidity. Following mortgage payoff, households increase consumption expenditures by 61% of the original payment. In comparison, households increase consumption by only 36% in response to a transitory payment adjustment induced by interest rate changes. Households with a higher payment-to-income ratio have a significantly lower marginal propensity to consume (MPC). These results have practical implications for policy markers seeking to design consumption boosting policies and are important for understanding how changes in monetary policy may affect consumer spending patterns.

Identification of Non-Equilibrium Beliefs in Games of Incomplete Information Using Experimental Data

Abstract This paper studies the identification of players’ preferences and beliefs in discrete choice games using experimental data. The experiment comprises a set of games that differ in their matrices of monetary payoffs. The researcher is interested in the identification of preferences (utility of money) and beliefs on the opponents’ expected behavior, without imposing equilibrium restrictions or parametric assumptions on utility and belief functions. We show that the hypothesis of unbiased/rational beliefs is testable as long as the set of games in the experiment imply variation in monetary payoffs of other players, keeping the own monetary payoff constant. We present conditions for the full identification of utility and belief functions at the individual level – without restrictions on players’ heterogeneity in preferences or beliefs. We apply our method to data from two experiments: a matching pennies game, and a public good game.

Machine Predictions and Human Decisions with Variation in Payoffs and Skill

Human decision-making differs due to variation in both incentives and available information. This constitutes a substantial challenge for the evaluation of whether and how machine learning predictions can improve decision outcomes. We propose a framework that incorporates machine learning on large-scale data into a choice model featuring heterogeneity in decision maker payoff functions and predictive skill. We apply this framework to the major health policy problem of improving the efficiency in antibiotic prescribing in primary care, one of the leading causes of antibiotic resistance. Our analysis reveals large variation in physicians' skill to diagnose bacterial infections and in how physicians trade off the externality inherent in antibiotic use against its curative benefit. Counterfactual policy simulations show that the combination of machine learning predictions with physician diagnostic skill results in a 25.4 percent reduction in prescribing and achieves the largest welfare gains compared to alternative policies for both estimated physician as well as conservative social planner preference weights on the antibiotic resistance externality.

Machine Predictions and Human Decisions with Variation in Payoffs and Skills

Human decision-making differs due to variation in both incentives and available information. This generates substantial challenges for the evaluation of whether and how machine learning predictions can improve decision outcomes. We propose a framework that incorporates machine learning on large-scale administrative data into a choice model featuring heterogeneity in decision maker payoff functions and predictive skill. We apply our framework to the major health policy problem of improving the efficiency in antibiotic prescribing in primary care, one of the leading causes of antibiotic resistance. Our analysis reveals large variation in physicians’ skill to diagnose bacterial infections and in how physicians trade off the externality inherent in antibiotic use against its curative benefit. Counterfactual policy simulations show the combination of machine learning predictions with physician diagnostic skill achieves a 25.4 percent reduction in prescribing and the largest welfare gains compared to alternative policies for estimated as well as plausible hypothetical weights on the antibiotic resistance externality.

Seasonal payoff variations and the evolution of cooperation in social dilemmas

Varying environmental conditions affect relations between interacting individuals in social dilemmas, thus affecting also the evolution of cooperation. Oftentimes these environmental variations are seasonal and can therefore be mathematically described as periodic changes. Accordingly, we here study how periodic shifts between different manifestations of social dilemmas affect cooperation. We observe a non-trivial interplay between the inherent spatiotemporal dynamics that characterizes the spreading of cooperation in a particular social dilemma type and the frequency of payoff changes. In particular, we show that periodic changes between two available games with global ordering best be fast, while periodic changes between global and local ordering games best be slow for cooperation to thrive. We also show that the frequency of periodic changes between two local ordering social dilemmas is irrelevant, because then the process is fast and simply the average cooperation level of the two is returned. The structure of the interaction network plays an important role too in that lattices promote local ordering, whilst random graphs hinder the formation of compact cooperative clusters. Conversely, for local ordering the regular structure of the interaction network is only marginally relevant as role-separating checkerboard patterns do not rely on long-range order.

Measuring Competitiveness and Cooperativeness

We develop an index of competitiveness and cooperativeness which is based on the primitives of a normal-form game, i.e., players, strategies and payoffs. The index relies on a unique decomposition of a given game into a zero-sum game and a common-interest game. The index decreases in the distance to its zero-sum part and it increases in the distance to its common-interest part. Alternatively, the index increases if the share of variation in payoffs captured by the zero-sum part increases. We compute our index for well-known classes of games such as Prisoner's Dilemma, games with Strategic Complements and Substitutes, All-pay auctions, Tullock contests, and Public Goods games. The comparative statics of our index coincide with economic intuition. The index does well in explaining experimental findings in the sense that more cooperative and less competitive behavior correlates with lower values of the index.

Peer effects and risk sharing in experimental asset markets

We investigate the effect of introducing information about peer portfolios in an experimental Arrow–Debreu economy. Confirming the prediction of a general equilibrium model with inequality averse preferences, we find that peer information leads to reduced variation in payoffs within peer groups. Information also improves risk sharing, as the data suggests that experiencing earnings deviations from peers induces a shift to more balanced portfolios. In a treatment where we highlight the highest earner, we observe a reduction in risk sharing, while highlighting the lowest earner has no effects compared to providing neutral information. Our results indicate that the presence of social information and its framing is an important determinant of equilibrium in financial markets.

Elicitation of expectations using Colonel Blotto

We develop a mechanism based on the Colonel Blotto game to elicit (subjective) expectations in a group-based manner. In this game, two players allocate resources over possible future events. A fixed prize is awarded based on the amounts the players allocate to the realized event. We consider two payoff variations: under the proportional-prize rule, the award is split proportionally to the resources that players allocate to the realized event; under the winner-takes-all rule, the full award is given to the player who allocate the most resources to the realized event. When probabilities by which events realize are common knowledge to the players, both games are Bayesian–Nash incentive compatible in the sense that (expected) equilibrium allocations perfectly reflect the true realization probabilities. By means of a laboratory experiment, we find that in a setting where realization probabilities are common knowledge the game with the proportional-prize rule (Prop) elicits better distributions compared to both the winner-takes-all variation (Win) and a benchmark mechanism based on an individual-based proper scoring rule (Ind). Without common knowledge of realization probabilities Prop is at least as good as Ind, showing that it is possible to use a game to elicit expectations in a similar fashion to using a proper scoring rule.

Challenging the evolution of social cooperation in a community governed by central control

Self-organization of cooperative behavior has been particularly interesting especially in communities where selfishness dominates more than social cooperativeness. These situations have often been described by the spatial prisoner’s dilemma game. In reality, however, a centralized control is often necessary to establish social order. But the robustness of this established social cooperation remains unclear. Using the spatial prisoner’s dilemma, we explore the evolution of cooperation not only in a community governed by central control, but also in selfish and realistic (law-abiding but selfish individuals) communities, by introducing two sources of stochasticities: defection-driven noise and stochastic payoff mutations. Individuals could imitate their best-performing neighbors, migrate to better locations, or do both. We show that although the presence of a central control is able to drive and maintain cooperation that is robust even in the presence of noise, social cooperation instantly collapse in the presence of defection-driven noise when migration alone is the only viable option. We also show that stochastic payoff variations enhance cooperation in realistic communities, while selfish communities are highly susceptible to defection-driven noise and stochastic payoff mutations.

Temporal variation in reproductive costs and payoffs shapes the flowering strategy of a neotropical milkweed, Asclepias curassavica

AbstractA central goal of evolutionary ecology is to understand the factors that select for particular life history strategies, such as delaying reproduction. For example, environmental variation and reproductive costs to survival and growth often select for reproductive delays in semelparous and iteroparous species. In this study, we examine how variation in reproductive cost, which we define as a reduction to growth, survival, or future reproduction after a reproductive event, may select for reproductive delay in an iteroparous Neotropical milkweed with no obvious reproductive season. We analyzed demographic data collected every 3 months for 3 years from four populations of Asclepias curassavica in Monteverde, Costa Rica. We detected costs of flowering to survival and growth that varied in magnitude between our 12 transition periods without a seasonal pattern. The populations also exhibited temporal variation in reproductive payoffs measured as seedling establishment. We incorporated these reproductive costs into demographic projection models, which predicted a delayed flowering strategy only when we included temporal variation in costs and payoffs. Temporal variation in reproductive costs and payoffs is an important selective force in the evolution of delayed flowering in iteroparous species. Further, a lack of predictable seasonal pattern to reproductive costs and payoffs may contribute to the lack of seasonal reproductive patterns observed in our study species and other Neotropical species.

Improving Spatial Coordination Rates under the Agglomeration Bonus Scheme: A Laboratory Experiment with a Pecuniary and a Non‐Pecuniary Mechanism (NUDGE)

The Agglomeration Bonus is a Payment for Ecosystem Services scheme that focuses on achieving spatially‐coordinated land use across neighboring, privately‐owned agricultural properties. In this article, I use a laboratory experiment to examine the role of two mechanisms in incentivizing spatially‐coordinated land uses under the Agglomeration Bonus scheme on a geographical landscape resembling a local circular network. The first mechanism is pecuniary in format and varies the payoffs associated with coordination, while the second is a non‐pecuniary mechanism that varies the amount of information participants have about the land use choices of other participants, specifically of those from another community. The payoff variation is implemented as a within‐subject treatment and the information treatment in a between‐subject format. The results indicate that the coordination rates are higher if payments associated with coordination are higher. Also, having information about outcomes of the Agglomeration Bonus scheme from another community improves spatial coordination rates in both communities.

The effects of heterogeneous interaction and risk attitude adaptation on the evolution of cooperation

This paper addresses the evolution of cooperation in a multi-agent system with agents interacting heterogeneously with each other based on the iterated prisoner’s dilemma (IPD) game. The heterogeneity of interaction is defined in two models. First, agents in a network are restricted to interacting with only their neighbors (local interaction). Second, agents are allowed to adopt different IPD strategies against different opponents (discriminative interaction). These two heterogeneous interaction scenarios are different to the classical evolutionary game, in which each agent interacts with every other agent in the population by adopting the same strategy against all opponents. Moreover, agents adapt their risk attitudes while engaging in interactions. Agents with payoffs above (or below) their aspirations will become more risk averse (or risk seeking) in subsequent interactions, wherein risk is defined as the standard deviation of one-move payoffs in the IPD game. In simulation experiments with agents using only own historical payoffs as aspirations (historical comparison), we find that the whole population can achieve a high level of cooperation via the risk attitude adaptation mechanism, in the cases of either local or discriminative interaction models. Meanwhile, when agents use the population’s average payoff as aspirations (social comparison) for adapting risk attitudes, the high level of cooperation can only be sustained in a portion of the population (i.e., partial cooperation). This finding also holds true in both of the heterogeneous scenarios. Considering that payoffs cannot be precisely estimated in a realistic IPD game, simulation experiments are also conducted with a Gaussian disturbance added to the game payoffs. The results reveal that partial cooperation in the population under social comparison is more robust to the variation in payoffs than the global cooperation under historical comparison.

Trust Based Dynamic Bandwidth Allocation Scheme for Ethernet Passive Optical Networks

Recently, Ethernet Passive Optical Network (EPON) is a significant solution in the access layer of network that can provide large amount of bandwidth for different kind of traffic. In this paper, we propose a dynamic bandwidth allocation scheme based on the trust based VCG-Kelly mechanism. To enhance the EPON system performance, the proposed scheme can take into account the measure of each ONU's payoff variation succeeding at a given bandwidth allocation. By considering the current outcome, ONUs adaptively select their bid strategies and the OLT dynamically allocates bandwidth to reach a certain desired EPON outcome. In addition, we also consider the network security situation, which reflects what is happening in the EPON network including both the offense and defense behaviors. During this iterative learning approach, the EPON system can converge to a stable network state. Evidences from simulations demonstrate that the proposed scheme outperforms the existing schemes.

Spatial heterogeneity promotes coexistence of rock–paper–scissors metacommunities

The rock–paper–scissors game–which is characterized by three strategies R,P,S, satisfying the non-transitive relations S excludes P, P excludes R, and R excludes S–serves as a simple prototype for studying more complex non-transitive systems. For well-mixed systems where interactions result in fitness reductions of the losers exceeding fitness gains of the winners, classical theory predicts that two strategies go extinct. The effects of spatial heterogeneity and dispersal rates on this outcome are analyzed using a general framework for evolutionary games in patchy landscapes. The analysis reveals that coexistence is determined by the rates at which dominant strategies invade a landscape occupied by the subordinate strategy (e.g. rock invades a landscape occupied by scissors) and the rates at which subordinate strategies get excluded in a landscape occupied by the dominant strategy (e.g. scissors gets excluded in a landscape occupied by rock). These invasion and exclusion rates correspond to eigenvalues of the linearized dynamics near single strategy equilibria. Coexistence occurs when the product of the invasion rates exceeds the product of the exclusion rates. Provided there is sufficient spatial variation in payoffs, the analysis identifies a critical dispersal rate d∗ required for regional persistence. For dispersal rates below d∗, the product of the invasion rates exceeds the product of the exclusion rates and the rock–paper–scissors metacommunities persist regionally despite being extinction prone locally. For dispersal rates above d∗, the product of the exclusion rates exceeds the product of the invasion rates and the strategies are extinction prone. These results highlight the delicate interplay between spatial heterogeneity and dispersal in mediating long-term outcomes for evolutionary games.

Molt, feather growth rate and body condition of male and female Barn Swallows

Molt and ecdysis are costly activities crucial to several animals. Most birds completely molt their plumage once per year. The diverse energy and aerodynamic costs of molt are expected to shape the evolution of molt schedules and rate of feather renewal. Differences in molt strategies are also predicted between the sexes because of sex-related variation in fitness payoffs of rapid and early feather renewal. Feathers show barring patterns that reflect daily growth pulses. Ptilochronological analysis of growth bar width (GBW) reflecting condition-dependent feather growth rate can provide important, though overlooked information on molt strategies, and on the effects of body condition on feather renewal and subsequent migration or breeding. In this study of migratory Barn Swallows (Hirundo rustica) wintering in Nigeria, for the first time we analyzed sex-related variation in molt schedules and feather growth rate using molecular sexing. We found no sex difference in molt schedules but faster feather growth in females. Hence, protandry in arrival of swallows to European breeding grounds does not depend on sex-specific timing of molt or feather renewal rate. Individuals with advanced molt had larger GBW and muscle mass, suggesting that individuals in good condition complete molt earlier thanks to faster feather growth. Arrival date on the breeding areas may thus reliably signal male quality, if molt completion constrains migration. Finally, the frequency of low GBW values among wintering males was larger than during breeding in swallows that winter in Nigeria, suggesting selection against low GBW. This study provides the first unequivocal data on sex-related variation in molt schedules in a species with no discrete sexual dimorphism, and emphasizes the potential of ptilochronology in ecological–evolutionary studies, as it shows that feather growth rate covaries with timing of molt but may not mediate protandrous migration.

Host-parasite dynamics lead to mixed cooperative games

Although the Prisoner's dilemma is a leading metaphor for the evolution of sociality, only a few studies demonstrate that this game indeed operates in nature. We offer an alternative perspective, in which parasites and their hosts are used as a model system, suggesting that Prisoner's dilemma may be rare due to different individuals experiencing variation in the payoffs they receive from alternative strategies. Ectoparasites (such as fleas) move stochastically between hosts, causing differential parasite burdens. The resulting variance in the need for cooperation — in this case cooperative allogrooming — means that payoffs for different strategies (e.g. cooperate and defect) are not fixed. Our simulations revealed that due to parasite dynamics, cooperation among hosts conforms to a mixture of two games: Mutualism and Cruel Bind, both of which are more likely to coerce individuals into mutual cooperation than Prisoner's dilemma. Though interesting, Prisoner's dilemma is in fact the least likely scenario. If payoff variation is common, the dominance of the Prisoner's dilemma paradigm may have made us unnecessarily puzzled by cooperation in nature.

Individual variation and the resolution of conflict over parental care in penduline tits

Eurasian penduline tits (Remiz pendulinus) have an unusually diverse breeding system consisting of frequent male and female polygamy, and uniparental care by the male or the female. Intriguingly, 30 to 40 per cent of all nests are deserted by both parents. To understand the evolution of this diverse breeding system and frequent clutch desertion, we use 6 years of field data to derive fitness expectations for males and females depending on whether or not they care for their offspring. The resulting payoff matrix corresponds to an asymmetric Snowdrift Game with two alternative evolutionarily stable strategies (ESSs): female-only and male-only care. This, however, does not explain the polymorphism in care strategies and frequent biparental desertion, because theory predicts that one of the two ESSs should have spread to fixation. Using a bootstrapping approach, we demonstrate that taking account of individual variation in payoffs explains the patterns of care better than a model based on the average population payoff matrix. In particular, a model incorporating differences in male attractiveness closely predicts the observed frequencies of male and female desertion. Our work highlights the need for a new generation of individual-based evolutionary game-theoretic models.

Cleaning wrasse species vary with respect to dependency on the mutualism and behavioural adaptations in interactions

Interspecific mutualisms are an essential feature of life on earth, yet we know little about their evolution and stability. In many mutualisms several species are available as partners, raising questions about the similarity in function and behavioural repertoire depending on the partner species. Furthermore, variation between species in the quantity and quality of interactions resulting in variation in payoffs may allow us to infer the potential evolutionary origin of a multispecies mutualism complex. We addressed these issues in the marine cleaning mutualism, in which so-called ‘cleaners’ remove ectoparasites from so-called ‘client’ reef fish. We measured several parameters concerning the quantity and quality of cleaning interactions in six sympatric cleaner wrasse species. We found significant variation between cleaner species with respect to client diversity, the number of interactions with predatory clients, the duration of interactions, the frequency of client jolts as a correlate of ‘cheating’ by cleaners, and behaviours used for manipulation of client decisions. Exploratory correlations between cleaner species’ dependency and our variables of interest suggest that cleaning originated as a conflict-free by-product mutualism and evolved towards more sophisticated behaviours, including strategic behaviours for interactions with predators, cheating and manipulation specifically adapted to the client type. 2011 The Association for the Study of Animal Behaviour. Published by Elsevier Ltd.