Influence of Social Norms on Individual Preferences

Ostrom's Game-Theoretic Models with Social Preferences and Punishment

Reputation and Increased Cooperation in Repeated Prisoners' Dilemma Games

Elinor Ostrom

Targeting Free-Riders as a Mechanism for Sustaining Cooperation

Predicting Behavior in a Community Project

In a scenario where two competing local businesses must decide on their advertising spending, a model assuming a single, isolated interaction between purely self-interested parties predicts that both will choose high-spending strategies, resulting in lower profits for both. However, if these businesses are located in a small town and expect to compete for many years, they often end up cooperating by keeping advertising spending low. Which of the following best explains this cooperative outcome, which the simpler model fails to predict?

Explaining Cooperative Behavior Beyond Simple Models

In many large, anonymous online forums, users voluntarily spend time answering complex questions posed by strangers, even with no direct monetary reward. A simple economic model assuming that individuals are purely self-interested and engage in one-time interactions would predict that very few people would answer questions. Which of the following factors, used to enhance such models, provides the least compelling explanation for the widespread cooperative behavior observed in these forums?

Standard economic models often predict non-cooperative outcomes because they assume individuals are purely self-interested and interact only once. However, cooperation is common in the real world. Match each real-world scenario of cooperation with the primary factor that, when added to a model, best explains the observed behavior.

Explaining Cooperation in a Household Dilemma

A game-theoretic model that is expanded to include the possibility of repeated interactions between players will necessarily predict a cooperative outcome.

Explaining Cooperation in an Anonymous Online Project

A simple economic model predicts that two rival software companies, in a one-time interaction, will both engage in costly negative advertising, hurting each other's profits. However, in reality, these companies often refrain from such tactics. An analyst suggests modifying the model by incorporating 'altruism,' assuming each company has some baseline concern for the other's success. Why is this modification, by itself, likely an incomplete explanation for the observed cooperative restraint?

Altruism as a Solution to Social Dilemmas

One-Shot vs. Repeated Games

Designing an Experiment to Test Cooperative Behavior