We compare a partners condition where the same small group of subjects plays a repeated public good game to a strangers condition where subjects play this game in changing group formations. Subjects in the partners condition contribute from the first period on significantly more to the public good than subjects in the strangers condition. In the strangers condition, contributions show a continual decay, while in the partners condition, contributions fluctuate on a high level until they decrease in the final periods. We interpret subjects' behavior in terms of conditional cooperation which is characterized by both future-oriented and reactive behavior. Keywords: Experimental Economics, Public Goods, Voluntary Contributions, Cooperation JEL-Code: C92, H41, * The authors want to thank Simon Gchter, Roy Gardner, Alfred Mller, Reinhard Selten, Bodo Vogt, and two anonymous referees for their valuable comments on an earlier version of this paper. Thanks are also due to Otto Perdeck for pro...

This paper uses a three-games (or triadic) design to identify trusting and reciprocating behavior. A large literature on single-game trust and reciprocity experiments is based on the implicit assumption that subjects do not have altruistic or inequality-averse other-regarding preferences. Such experimental designs test compound hypotheses that include the hypothesis that other-regarding preferences do not affect behavior. In contrast, experiments with the triadic design do discriminate between transfers resulting from trust or reciprocity and transfers resulting from other-regarding preferences that are not conditional on the behavior of others. Decomposing trust from altruism and reciprocity from altruism or inequality aversion is critical to obtaining empirical information that can guide the process of constructing models that can increase the empirical validity of game theory.

In open environments there is no central control over agent behaviors. On the contrary, agents in such systems can be assumed to be primarily driven by self interests. Under the assumption that agents remain in the system for significant time periods, or that the agent composition changes only slowly, we have previously presented a prescriptive strategy for promoting and sustaining cooperation among self-interested agents. The adaptive, probabilistic policy we have prescribed promotes reciprocative cooperation that improves both individual and group performance in the long run. In the short run, however, selfish agents could still exploit reciprocative agents. In this paper, we evaluate the hypothesis that the exploitative tendencies of selfish agents can be effectively curbed if reciprocative agents share their "opinions" of other agents. Since the true nature of agents are not known a priori and is learned from experience, believing others can also pose other hazards. We provide a learned trust-based evaluation function that is shown to resist both individual and concerted deception on the part of selfish agents. 1

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In open environments there is no central control over agent behaviors. On the contrary, agents in such systems can be assumed to be primarily driven by self interests. Under the assumption that agents remain in the system for significant time periods, or that the agent composition changes only slowly, we have previously presented a prescriptive strategy for promoting and sustaining cooperation in the group. This strategy was shown to improve both individual and group performance in the long run. Our prescribed strategy has been an adaptive, probabilistic, reciprocity-based policy for deciding which other individual to cooperate with. In this paper we investigate two mechanisms to limit exploitation of the reciprocative strategy by deceptive agents : 1) a penalty factor for declining requests for help, and 2) a cutoff limit on outstanding balance of help. We evaluate the relative effectiveness of these mechanisms for augmenting robustness of agent behaviors without adversely ...

Recent works in multi-agent systems have identified agent behaviors that can develop and sustain mutually beneficial cooperative relationships with like-minded agents and can resist exploitation from selfish agents. Researchers have proposed the use of a probabilistic reciprocity scheme that uses summary information from past interactions to decide whether or not to honor a request for help from another agent. This behavior has been found to be close to optimal in homogeneous groups and outperform exploiters in mixed groups. A major shortcoming of these experiments, however, is that the composition of the group in term of agent behaviors is fixed. We believe that real-life rational agents, on the contrary, will change their behaviors based on observed performances of di#erent behavioral traits with the goal of maximizing performance. In this paper, we present results from experiments on two distinct domains with population groups whose behavioral composition changes based on the performance of the agents. Based on the experimental results, we identify ecological niches for variants of exploitative selfish agents and robust reciprocative agents.

Those who contribute to a public good sometimes experience punitive sentiments toward others. But is the system that produces these sentiments an adaptation and, if so, which collective action problem was it designed to solve? Prior results from experimental economics show that acts of free riding are sometimes punished; that punishment deters free-riding; and that the risk or actuality of punishment recruits higher levels of cooperation in a joint effort. This suggests that one function of punitive sentiments could be to recruit labor for collective actions. However, adaptations designed to cause participation in collective actions could not have evolved unless there were some mechanism that protected those who participated from having lower fitness than non-participating free riders. Therefore, a second possible function of punishment could be to eliminate or reverse fitness differentials that favor free rider designs over participant designs. To map the computational structure of this motivational adaptation (and hence identify its specific function) requires data that relate an individual's circumstances to his or her desire to punish. Herein we report such data. The results indicate that the computational system that regulates one's level of punitive sentiment in collective action contexts is functionally specialized for removing the fitness advantage enjoyed by free riders, rather than for labor recruitment or other functions. Results also support the hypothesis that a separate pro-reward motivational system exists that appears designed to handle the problem of labor recruitment. Rational choice counterexplanations for punitive sentiments were considered, but eliminated on the basis of the evidence.

If a person doesn’t give something to me, I won’t give anything to that person. If I’m sitting eating, and someone like that comes by, I say, “Uhn, uhn. I’m not going to give any of this to you. When you have food, the things you do with it make me unhappy. If you even once in a while gave me something nice, I would surely give some of this to you.” Nisa from Nisa: The Life and Words of a!Kung Woman, Shostak, 1981, p. 89 Instead of keeping things, [!Kung] use them as gifts to express generosity and friendly intent, and to put people under obligation to make return tokens of friendship....In reciprocating, one does not give the same object back again but something of comparable value. Eland fat is a very highly valued gift...Toma said that when he had eland fat to give, he took shrewd note of certain objects he might like to have and gave their owners especially generous gifts of fat. Marshall, 1976, pp. 366–369

Organizations are composed of stable, predominantly cooperative interactions or n-person exchanges. Humans have been engaging in n-person exchanges for a great enough period of evolutionary time that we appear to have evolved a distinct constellation of species-typical mechanisms specialized to solve the adaptive problems posed by this form of social interaction. These mechanisms appear to have been evolutionarily elaborated out of the cognitive infrastructure that initially evolved for dyadic exchange. Key adaptive problems that these mechanisms are designed to solve include coordination among individuals, and defense against exploitation by free riders. Multi-individual cooperation could not have been maintained over evolutionary time if free riders reliably benefited more than contributors to collective enterprises, and so outcompeted them. As a result, humans evolved mechanisms that implement an aversion to exploitation by free riding, and a strategy of conditional cooperation, supplemented by punitive sentiment towards free riders. Because of the design of these mechanisms, how free riding is treated is a central determinant of the survival and health of cooperative organizations. The mapping of the evolved psychology of n-party exchange cooperation may contribute to the construction of a principled theoretical foundation for the understanding of human behavior in organizations.

Although American Legal Realism fell on hard times, the objections of the Realists with legal formalism had substance earlier in the century and have substance today. As. developed in this paper, there are many parallels between Legal Realism and older style institutional economics. Both failed for lack of operationalization. The New Institutional Economics works out of a law, economics, and organizations perspective and takes operationalization much more seriously. This same approach could be applied to the concerns of Legal Realism, bringing added value in the process.