Samuel Bowles, Herbert Gintis

Paper #: 08-07-030

Economists and biologists have both provided explanations of decentralized cooperation among self-regarding individuals as a result of repeated interactions. Repeated interactions do provide opportunities for cooperative individuals to discipline defectors, and may be effective in groups of two individuals. However, we will show that none of these models is adequate for groups of reasonable size and for plausible assumptions about the information available to each individual. Moreover, even presupposing extraordinary cognitive capacities and levels of patience among the cooperating individuals, it is unlikely that a group of more than two individuals would ever discover the cooperative equilibria that the models have identified, and almost certainly, if it were to hit on one, its members would abandon it in short order. Though intended as models of decentralized interaction, the models by which selfish Homo economicus is said to cooperate implicitly presume implausible levels of coordination such as might in the real world be provided by social norms or formal institutions. The inadequacy of these models, coupled with extensive experimental and other empirical evidence of human cooperation suggests that other-regarding individual preferences in the context of social institutions that facilitate and direct human cooperation must be part of an adequate explanation.

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