Stable cooperation emerges in stochastic multiplicative growth

TL;DR

This paper introduces a novel mechanism for the emergence of cooperation among agents with stochastic multiplicative wealth changes, demonstrating that long-term cooperation provides individual advantages by mitigating environmental fluctuations.

Contribution

It presents a new mechanism showing how cooperation can emerge and be stable in stochastic multiplicative growth environments, emphasizing the role of long-term horizons.

Findings

Cooperation offers individual advantages by buffering environmental fluctuations.

Long time-horizons promote the stability of cooperative behavior.

A new mechanism for cooperation emergence in stochastic environments.

Abstract

Understanding the evolutionary stability of cooperation is a central problem in biology, sociology, and economics. There exist only a few known mechanisms that guarantee the existence of cooperation and its robustness to cheating. Here, we introduce a new mechanism for the emergence of cooperation in the presence of fluctuations. We consider agents whose wealth change stochastically in a multiplicative fashion. Each agent can share part of her wealth as public good, which is equally distributed among all the agents. We show that, when agents operate with long time-horizons, cooperation produce an advantage at the individual level, as it effectively screens agents from the deleterious effect of environmental fluctuations.