Does Spending More Always Ensure Higher Cooperation? An Analysis of Institutional Incentives on Heterogeneous Networks

TL;DR

This study investigates how different incentive schemes affect cooperation in complex, heterogeneous networks, revealing that poorly designed incentives can harm cooperation and waste resources in diverse social settings.

Contribution

It extends existing models by incorporating information constraints, cost considerations, complex network structures, and stochastic social learning, providing more realistic insights into incentive effectiveness.

Findings

Careless promotion of cooperators can lead to their decline in diverse populations.

Emergent cyclic patterns can damage cooperation and deplete external investments.

Network structure and information availability critically influence incentive outcomes.

Abstract

Humans have developed considerable machinery used at scale to create policies and to distribute incentives, yet we are forever seeking ways in which to improve upon these, our institutions. Especially when funding is limited, it is imperative to optimise spending without sacrificing positive outcomes, a challenge which has often been approached within several areas of social, life and engineering sciences. These studies often neglect the availability of information, cost restraints, or the underlying complex network structures, which define real-world populations. Here, we have extended these models, including the aforementioned concerns, but also tested the robustness of their findings to stochastic social learning paradigms. Akin to real-world decisions on how best to distribute endowments, we study several incentive schemes, which consider information about the overall population, local neighbourhoods, or the level of influence which a cooperative node has in the network, selectively rewarding cooperative behaviour if certain criteria are met. Following a transition towards a more realistic network setting and stochastic behavioural update rule, we found that carelessly promoting cooperators can often lead to their downfall in socially diverse settings. These emergent cyclic patterns not only damage cooperation, but also decimate the budgets of external investors. Our findings highlight the complexity of designing effective and cogent investment policies in socially diverse populations.