Efficient Coordination in Weakest-Link Games

Abstract

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Cooperation and punishment mechanisms in uncertain and dynamic networks

“…The use of network punishment has been documented in previous studies involving endogenous updates to the interaction neighborhood without uncertainty in various types of network games (e.g., Rand et al (2011), Riedl et al (2016)). Compared to network punishment, action punishment is much less targeted in network settings because any retaliatory action/defection affects not only the defector but also the cooperative neighbors.…”

“…The only way to produce a social surplus is a connection between two cooperators, and, conversely, the only way to reduce the social surplus by an equal amount is a connection between two defectors. This is in contrast to studies that have non-negative or small negative payoffs, which lead to the emergence of over-connected networks because the losses from being connected to a defector are non-existent or negligible.10 See for exampleMorris (2000),,Riedl et al (2016), andYang et al (2017).11 Note that participants have information about the local network structure (i.e., their neighbors), but they do…”

“…When it is too high, cooperators cannot detach from defectors as much as defectors re-attach and, hence, subjects resort to behavioral reciprocity and switch their behavior to defection.5 A substantial related literature studies how endogenous group formation affects play in PD, public good and weak link games. Contributions includeEhrhart et al (1999),Hauk and Nagel (2001),Riedl and Ule (2002),Coricelli et al (2004),Cinyabuguma et al (2005),Page et al (2005),Güth et al (2007),Ahn et al (2009),Brandts et al (2009),Charness and Yang (2014),Riedl et al (2016),Yang et al (2017),Riyanto and Teh (2020). SeeChoi et al (2016) for a comprehensive review.…”

“…The only exception is analysis conditioned on reputation history, where we focus on rounds 6-21 because the first five rounds are needed to build a complete history of past plays.20 This methodology has been used in prior work involving network experiments in which the sample size at the network level is limited due to the number of participants required per network (e.g.,Gallo and Yan (2015)). It is typical for network experiments to have 6-10 independent network-level observations in each treatment(Rand et al (2011), Riedl et al (2016,Yang et al (2017),Gallo et al (2019)).…”

“…See alsoRiedl et al (2016),Yang et al (2017), andTeh (2020) for the same mechanism in the context of dynamic network coordination games.22 In these studies, strategies are defined to be lenient if they do not prescribe sure defection following a single defection by the opponent, and forgiving if they return to cooperation after having defected. The main finding is that in the presence of reputational uncertainty subjects use strategies that are both lenient and forgiving.…”