Spillover Effects of Institutions on Cooperative Behavior, Preferences, and Beliefs

Most institutions are limited in scope. We study experimentally how enforcement institutions affect behavior, preferences, and beliefs beyond their direct influence over the behaviors they control. Groups play two identical public good games, with cooperation institutionally enforced in one game. Institutions generally have economically significant positive spillover effects to the unregulated game. We also observe that institutions enhance conditional cooperation preferences and beliefs about others’ cooperativeness, suggesting that both factors are drivers of observed spillover effects. In additional treatments, we provide evidence for several factors, including characteristics of institutions, that enhance or limit the effectiveness and scope of spillover effects. (JEL C92, D02, D83, D91, H41)

The Role of the Ventromedial Prefrontal Cortex in Public Good and Public Bad Games: Evidence From a tDCS Study

Although humans constitute an exceptionally cooperative species that is able to collaborate on large scales for common benefits, cooperation remains a longstanding puzzle in biological and social science. Moreover, cooperation is not always related to resource allocation and gains but is often related to losses. Revealing the neurological mechanisms and brain regions related to cooperation is important for reinforcing cooperation-related gains and losses. Recent neuroscience studies have found that the decision-making process of cooperation is involved in the function of the ventromedial prefrontal cortex (VMPFC). In the present study, we aimed to investigate the causal role of the VMPFC in cooperative behavior concerning gains and losses through the application of transcranial direct current stimulation (tDCS). We integrated cooperation-related gains and losses into a unified paradigm. Based on the paradigm, we researched cooperation behaviors regarding gains in standard public good games and introduced public bad games to investigate cooperative behavior regarding losses. Our study revealed that the VMPFC plays different roles concerning gains and losses in situations requiring cooperation. Anodal stimulation over the VMPFC decreased cooperative behavior in public bad games, whereas stimulation over the VMPFC did not change cooperative behavior in public good games. Moreover, participants’ beliefs about others’ cooperation were changed in public bad games but not in public good games. Finally, participants’ cooperative attitudes were not influenced in the public good or public bad games under the three stimulation conditions.

Cooperation in Threshold Public Projects with Binary Actions

When can cooperation arise from self-interested decisions in public goods games? And how can we help agents to act cooperatively? We examine these classical questions in a pivotal participation game, a variant of public good games, where heterogeneous agents make binary participation decisions on contributing their endowments, and the public project succeeds when it has enough contributions. We prove it is NP-complete to decide the existence of a cooperative Nash equilibrium such that the project succeeds. We demonstrate that the decision problem becomes easy if agents are homogeneous enough. We then propose two algorithms to help cooperation in the game. Our first algorithm adds an external investment to the public project, and our second algorithm uses matching funds. We show the cost to induce a cooperative Nash equilibrium is near-optimal for both algorithms. Finally, the cost of matching funds can always be smaller than the cost of adding an external investment. Intuitively, matching funds provide a greater incentive for cooperation than adding an external investment does.

Cooperation in spatial public good games depends on the locality effects of game, adaptation, and punishment

Despite intensive studies on the evolution of cooperation in spatial public goods games, there have been few investigations into locality effects in interaction games, adaptation, and punishment. Here we analyze locality effects using an agent-based model of a regular graph. Our simulation shows that a situation containing a local game, local punishment, and global adaptation leads to the most robustly cooperative regime. Further, we show an interesting feature in local punishment. Previous studies showed that a local game and global adaptation are likely to generate cooperation. However, they did not consider punishment. We show that if local punishment is introduced in spatial public goods games, a situation satisfying either local game or local adaptation is likely to generate cooperation. We thus propose two principles. One is if interactions in games can be restricted locally, it is likely to generate cooperation independent of the interaction situations on punishment and adaptation. The other is if the games must be played globally, a cooperative regime requires both local punishment and local adaptation.