Solving the collective-risk social dilemma with risky assets in well-mixed and structured populations

TL;DR

This paper demonstrates that adding risky assets to personal endowments can promote cooperation in collective-risk social dilemmas across well-mixed and structured populations, with optimal asset distribution depending on risk levels.

Contribution

It introduces the concept that risky assets influence cooperation dynamics and identifies optimal asset allocation strategies based on risk levels in social dilemmas.

Findings

Risky assets lead to stable mixed cooperation states.

Uniform asset distribution is optimal in high-risk scenarios.

Bounded rational allocation works best in low-risk situations.

Abstract

In the collective-risk social dilemma, players lose their personal endowments if contributions to the common pool are too small. This fact alone, however, does not always deter selfish individuals from defecting. The temptations to free-ride on the prosocial efforts of others are strong because we are hardwired to maximize our own fitness regardless of the consequences this might have for the public good. Here we show that the addition of risky assets to the personal endowments, both of which are lost if the collective target is not reached, can contribute to solving the collective-risk social dilemma. In infinite well-mixed populations risky assets introduce new stable and unstable mixed steady states, whereby the stable mixed steady state converges to full cooperation as either the risk of collective failure or the amount of risky assets increases. Similarly, in finite well-mixed populations the introduction of risky assets enforces configurations where cooperative behavior thrives. In structured populations cooperation is promoted as well, but the distribution of assets amongst the groups is crucial. Surprisingly, we find that the completely rational allocation of assets only to the most successful groups is not optimal, and this regardless of whether the risk of collective failure is high or low. Instead, in low-risk situations bounded rational allocation of assets works best, while in high-risk situations the simplest uniform distribution of assets among all the groups is optimal. These results indicate that prosocial behavior depends sensitively on the potential losses individuals are likely to endure if they fail to cooperate.