Discussion Papers in Economics

Planning Unit, Indian Statistical Institute, Delhi

#02-05:

Understanding Reciprocity:
by Rajiv Sethi and E. Somanathan

Abstract

This paper surveys the evolutionary game theoretic literature on reciprocity in human interactions, dealing both with long-term relationships and with sporadic interactions. Four basic themes, repetition, commitment, assortation, and parochialism, appear repeatedly throughout the literature. Repetition can give rise to the evolution of behavior that exhibits reciprocity-like features but a vast array of other behaviors are also stable. In sporadic interactions, reciprocity can be stable if the propensity to punish selfish actions can induce opportunists to cooperate, if reciprocators themselves behave opportunistically when they expect others to do so, or if matching is sufficiently assortative.

Full-Text