Cost efficiency of institutional incentives for promoting cooperation in finite populations

The paradigm of tax-reward and tax-punishment strategies in the advancement of public resource management dynamics

In contemporary society, the effective utilization of public resources remains a subject of significant concern. A common issue arises from defectors seeking to obtain an excessive share of these resources for personal gain, potentially leading to resource depletion. To mitigate this tragedy and ensure sustainable development of resources, implementing mechanisms to either reward those who adhere to distribution rules or penalize those who do not, appears advantageous. We introduce two models: a tax-reward model and a tax-punishment model, to address this issue. Our analysis reveals that in the tax-reward model, the evolutionary trajectory of the system is influenced not only by the tax revenue collected but also by the natural growth rate of the resources. Conversely, the tax-punishment model exhibits distinct characteristics when compared with the tax-reward model, notably the potential for bistability. In such scenarios, the selection of initial conditions is critical, as it can determine the system's path. Furthermore, our study identifies instances where the system lacks stable points, exemplified by a limit cycle phenomenon, underscoring the complexity and dynamism inherent in managing public resources using these models.

Can institutions foster cooperation by wealth redistribution?

Theoretical models prescribe how institutions can promote cooperation in a population by imposing appropriate punishments or rewards on individuals. However, many real-world institutions are not sophisticated or responsive enough to ensure cooperation by calibrating their policies. Or, worse yet, an institution might selfishly exploit the population it governs for its own benefit. Here, we study the evolution of cooperation in the presence of an institution that is autonomous, in the sense that it has its own interests that may or may not align with those of the population. The institution imposes a tax on the population and redistributes a portion of the tax revenue to cooperators, withholding the remaining revenue for itself. The institution adjusts its rates of taxation and redistribution to optimize its own long-term, discounted utility. We consider three types of institutions with different goals, embodied in their utility functions. We show that a prosocial institution, whose goal is to maximize the average payoff of the population, can indeed promote cooperation-but only if it is sufficiently forward-looking. On the other hand, an institution that seeks to maximize welfare among cooperators alone will successfully promote collective cooperation even if it is myopic. Remarkably, even a selfish institution, which seeks to maximize the revenue it withholds for itself, can nonetheless promote cooperation. The average payoff of the population increases when a selfish institution is more forward-looking, so that a population under a selfish regime can sometimes fare better than under anarchy. Our analysis highlights the potential benefits of institutional wealth redistribution, even when an institution does not share the interests of the population it governs.

Cost optimisation of hybrid institutional incentives for promoting cooperation in finite populations

In this paper, we rigorously study the problem of cost optimisation of hybrid (mixed) institutional incentives, which are a plan of actions involving the use of reward and punishment by an external decision-maker, for maximising the level (or guaranteeing at least a certain level) of cooperative behaviour in a well-mixed, finite population of self-regarding individuals who interact via cooperation dilemmas (Donation Game or Public Goods Game). We show that a mixed incentive scheme can offer a more cost-efficient approach for providing incentives while ensuring the same level or standard of cooperation in the long-run. We establish the asymptotic behaviour (namely neutral drift, strong selection, and infinite-population limits). We prove the existence of a phase transition, obtaining the critical threshold of the strength of selection at which the monotonicity of the cost function changes and providing an algorithm for finding the optimal value of the individual incentive cost. Our analytical results are illustrated with numerical investigations. Overall, our analysis provides novel theoretical insights into the design of cost-efficient institutional incentive mechanisms for promoting the evolution of cooperation in stochastic systems.

Deterrence through punishment can resolve collective risk dilemmas in carbon emission games

Collective risk social dilemmas are at the heart of the most pressing global challenges we are facing today, including climate change mitigation and the overuse of natural resources. Previous research has framed this problem as a public goods game (PGG), where a dilemma arises between short-term interests and long-term sustainability. In the PGG, subjects are placed in groups and asked to choose between cooperation and defection, while keeping in mind their personal interests as well as the commons. Here, we explore how and to what extent the costly punishment of defectors is successful in enforcing cooperation by means of human experiments. We show that an apparent irrational underestimation of the risk of being punished plays an important role, and that for sufficiently high punishment fines, this vanishes and the threat of deterrence suffices to preserve the commons. Interestingly, however, we find that high fines not only avert freeriders, but they also demotivate some of the most generous altruists. As a consequence, the tragedy of the commons is predominantly averted due to cooperators that contribute only their "fair share" to the common pool. We also find that larger groups require larger fines for the deterrence of punishment to have the desired prosocial effect.

Optimization of institutional incentives for cooperation in structured populations

The application of incentives, such as reward and punishment, is a frequently applied way for promoting cooperation among interacting individuals in structured populations. However, how to properly use the incentives is still a challenging problem for incentive-providing institutions. In particular, since the implementation of incentive is costly, to explore the optimal incentive protocol, which ensures the desired collective goal at a minimal cost, is worthy of study. In this work, we consider the positive and negative incentives for a structured population of individuals whose conflicting interactions are characterized by a Prisoner's Dilemma game. We establish an index function for quantifying the cumulative cost during the process of incentive implementation, and theoretically derive the optimal positive and negative incentive protocols for cooperation on regular networks. We find that both types of optimal incentive protocols are identical and time-invariant. Moreover, we compare the optimal rewarding and punishing schemes concerning implementation cost and provide a rigorous basis for the usage of incentives in the game-theoretical framework. We further perform computer simulations to support our theoretical results and explore their robustness for different types of population structures, including regular, random, small-world and scale-free networks.

Emergent behaviours in multi-agent systems with Evolutionary Game Theory

The mechanisms of emergence and evolution of collective behaviours in dynamical Multi-Agent Systems (MAS) of multiple interacting agents, with diverse behavioral strategies in co-presence, have been undergoing mathematical study via Evolutionary Game Theory (EGT). Their systematic study also resorts to agent-based modelling and simulation (ABM) techniques, thus enabling the study of aforesaid mechanisms under a variety of conditions, parameters, and alternative virtual games. This paper summarises some main research directions and challenges tackled in our group, using methods from EGT and ABM. These range from the introduction of cognitive and emotional mechanisms into agents’ implementation in an evolving MAS, to the cost-efficient interference for promoting prosocial behaviours in complex networks, to the regulation and governance of AI safety development ecology, and to the equilibrium analysis of random evolutionary multi-player games. This brief aims to sensitize the reader to EGT based issues, results and prospects, which are accruing in importance for the modeling of minds with machines and the engineering of prosocial behaviours in dynamical MAS, with impact on our understanding of the emergence and stability of collective behaviours. In all cases, important open problems in MAS research as viewed or prioritised by the group are described.

Costly incentives design from an institutional perspective: cooperation, sustainability and affluence

Incentives are usually introduced by the regulator entity (third-party), to promote cooperation in a market. The implementation of incentives is always costly and thus might fail to be enforced sustainably. This work aims at exploring the effects of incentives from an institutional perspective, while coping with the scenario where the third-party is part of the system but not composed by players. The evolutionary game theory (EGT) framework is applied to identify the incentives that lead to pure cooperation. In contrast to traditional EGT, this paper introduces an elimination mechanism that can reduce the market size. The incentives identified in the EGT analysis are further examined in simulation experiments which measure the market size, affluence and sustainability. The findings show: (1) light punishment leads to a reduction of the market size, yet heavier punishment is beneficial to the market size and wealth; (2) mixed incentives will generally lead to different wealth of the third party and of the participants. While under moderate strength, the wealth of both parties is the same and their overall wealth is maximal; (3) for sustainability, pure punishment (resp. reward) is sustainable (resp. unsustainable), the sustainability of mixed incentives depends on both their strength and agents’ rationality level.

Long-lasting effects of incentives and social preference: A public goods experiment

This paper addresses the question of the effectiveness and permanence of temporary incentives to contribute to a public good. Using a common experimental framework, we investigate the effects of a recommendation that takes the form of an exhortative message to contribute, a monetary punishment and a non-monetary reward to sustain high levels of contributions. In particular, we shed light on the differential impact these mechanisms have on heterogeneous types of agents. The results show that all three incentives increase contributions compared to a pre-phase where there is no incentive. Monetary sanctions lead to the highest contributions, but a sudden drop in contributions is observed once the incentive to punish is removed. On the contrary, Recommendation leads to the lowest contributions but maintains a long-lasting impact in the Post-policy phase. In particular, it makes free-riders increase their contribution over time in the post-incentive phase. Finally, non-monetary reward backfires against those who are weakly conditional cooperators. Our findings emphasize the importance of designing and maintaining incentives not only for free-riders, but for strong and weak conditional cooperators as well, depending on characteristics of the incentives.

Replicator dynamics of public goods games with global exclusion

Studies to date on the role of social exclusion in public cooperation have mainly focused on the peer or pool sanctioning types of excluding free-riders from the share of common goods. However, the exclusive behaviors are not necessarily performed by individuals or local organizations but may rather be implemented by a centralized enforcement institution at a global scale. Besides, previous modeling methods of either peer or pool exclusion often presuppose some particular forms of feedback between the individual or collective efforts and the efficiency of social exclusion and, therefore, cannot comprehensively evaluate their effects on the evolution of cooperation in the social dilemma situations. Here, we construct a general model of global exclusion by considering the successful construction of the centralized exclusive institution as an arbitrary non-decreasing and smooth function of the collective efforts made by the global excluders and then theoretically analyze its potential impacts in the replicator dynamics of the public goods game. Interestingly, we have shown that, despite the presence of both the first- and second-order free-riding problems, global exclusion can indeed lead to the emergence or even stabilization of public cooperation without the support of any other evolutionary mechanism. In addition, we have also observed rich dynamical behaviors, such as the occurrence of a global or local family of neutrally stable closed orbits revolving around a nonlinear center or the existence of stable heteroclinic cycles between defectors, cooperators as well as global excluders, which give rise to a classification of up to 21 different phases.

Indirect exclusion can promote cooperation in repeated group interactions

Social exclusion has been regarded as one of the most effective measures to promote the evolution of cooperation. In real society, the way in which social exclusion works can be direct or indirect. However, thus far there is no related work to explore how indirect exclusion influences the evolution of cooperation from a theoretical perspective. Here, we introduce indirect exclusion into the repeated public goods game where the game organizer probabilistically selects cooperators after the first game round to participate in the following possible game interactions. We then investigate the evolutionary dynamics of cooperation both in infinite and finite well-mixed populations. Through theoretical analysis and numerical calculations, we find that the introduction of indirect exclusion can induce the stable coexistence of cooperators and defectors or the dominance of cooperators, which thus effectively promotes the evolution of cooperation. Besides, we show that the identifying probability of the organizer has a nonlinear effect on public cooperation when its value is lower than an intermediate value, while the higher identifying probability can maintain a high level of cooperation. Furthermore, our results show that increasing the average rounds of game interactions can effectively promote the evolution of cooperation.

Institutional incentives for the evolution of committed cooperation: ensuring participation is as important as enhancing compliance

Both conventional wisdom and empirical evidence suggest that arranging a prior commitment or agreement before an interaction takes place enhances the chance of reaching mutual cooperation. Yet it is not clear what mechanisms might underlie the participation in and compliance with such a commitment, especially when participation is costly and non-compliance can be profitable. Here, we develop a theory of participation and compliance with respect to an explicit commitment formation process and to institutional incentives where individuals, at first, decide whether or not to join a cooperative agreement to play a one-shot social dilemma game. Using a mathematical model, we determine whether and when participating in a costly commitment, and complying with it, is an evolutionarily stable strategy, resulting in high levels of cooperation. We show that, given a sufficient budget for providing incentives, rewarding of commitment compliant behaviours better promotes cooperation than punishment of non-compliant ones. Moreover, by sparing part of this budget for rewarding those willing to participate in a commitment, the overall level of cooperation can be significantly enhanced for both reward and punishment. Finally, the presence of mistakes in deciding to participate favours evolutionary stability of commitment compliance and cooperation.