Indirect reciprocity with Bayesian reasoning and biases

by Bryce Morsky, Joshua B. Plotkin, Erol Akçay

Reputations can foster cooperation by indirect reciprocity: if I am good to you then others will be good to me. But this mechanism for cooperation in one-shot interactions only works when people agree on who is good and who is bad. Errors in actions or assessments can produce disagreements about reputations, which can unravel the positive feedback loop between social standing and pro-social behaviour. Cooperators can end up punished and defectors rewarded. Public reputation systems and empathy are two possible mechanisms to promote agreement about reputations. Here we suggest an alternative: Bayesian reasoning by observers. By taking into account the probabilities of errors in action and observation and their prior beliefs about the prevalence of good people in the population, observers can use Bayesian reasoning to determine whether or not someone is good. To study this scenario, we develop an evolutionary game theoretical model in which players use Bayesian reasoning to assess reputations, either publicly or privately. We explore this model analytically and numerically for five social norms (Scoring, Shunning, Simple Standing, Staying, and Stern Judging). We systematically compare results to the case when agents do not use reasoning in determining reputations. We find that Bayesian reasoning reduces cooperation relative to non-reasoning, except in the case of the Scoring norm. Under Scoring, Bayesian reasoning can promote coexistence of three strategic types. Additionally, we study the effects of optimistic or pessimistic biases in individual beliefs about the degree of cooperation in the population. We find that optimism generally undermines cooperation whereas pessimism can, in some cases, promote cooperation.