A second-order stability analysis for the continuous model of indirect reciprocity

TL;DR

This paper develops a second-order perturbation analysis of continuous reputation dynamics in indirect reciprocity, clarifying how different social norms influence cooperation stability under noisy reputation assessments.

Contribution

It introduces a second-order perturbation framework for continuous reputation models, revealing how specific norms like Simple Standing promote stability despite reputation noise.

Findings

Second-order analysis distinguishes between Image Scoring and Simple Standing.

Justified punishment enhances cooperation stability.

Ignoring irrelevant information improves norm robustness.

Abstract

Reputation is one of key mechanisms to maintain human cooperation, but its analysis gets complicated if we consider the possibility that reputation does not reach consensus because of erroneous assessment. The difficulty is alleviated if we assume that reputation and cooperation do not take binary values but have continuous spectra so that disagreement over reputation can be analysed in a perturbative way. In this work, we carry out the analysis by expanding the dynamics of reputation to the second order of perturbation under the assumption that everyone initially cooperates with good reputation. The second-order theory clarifies the difference between Image Scoring and Simple Standing in that punishment for defection against a well-reputed player should be regarded as good for maintaining cooperation. Moreover, comparison among the leading eight shows that the stabilizing effect of justified punishment weakens if cooperation between two ill-reputed players is regarded as bad. Our analysis thus explains how Simple Standing achieves a high level of stability by permitting justified punishment and also by disregarding irrelevant information in assessing cooperation. This observation suggests which factors affect the stability of a social norm when reputation can be perturbed by noise.