Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/197368
Authors: 
Gaudeul, Alexia
Keser, Claudia
Müller, Stephan
Year of Publication: 
2019
Series/Report no.: 
cege Discussion Papers 370
Abstract: 
We study the coexistence of strategies in the indirect reciprocity game where agents have access to second-order information. We fully characterize the evolutionary stable equilibria and analyze their comparative statics with respect to the cost-benefit ratio (CBR). There are indeed only two stable sets of equilibria enabling cooperation, one for low CBRs involving two strategies and one for higher CBR's which involves two additional strategies. We thereby offer an explanation for the coexistence of different moral judgments among humans. Both equilibria require the presence of second-order discriminators which highlights the necessity for higher-order information to sustain cooperation through indirect reciprocity. In a laboratory experiment, we find that more than 75% of subjects play strategies that belong to the predicted equilibrium set. Furthermore, varying the CBR across treatments leads to changes in the distribution of strategies that are in line with theoretical predictions.
Subjects: 
Indirect reciprocity
Cooperation
Evolution
Experiment
JEL: 
C73
C91
D83
Document Type: 
Working Paper

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