Rational Exploitation of the Core by the Periphery? On the Collective (In)efficiency of Endogenous Enforcement of Universal Conditional Cooperation in a Core-Periphery Network

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Abstract

Raub and Weesie (1990) proposed a game theoretical model addressingeffects of network embeddedness on conditional cooperation between two actors.This work showed that network embeddedness can facilitate conditional coopera-tion by reducing uncertainty, in line with a number of follow-up contributions andconsistently with results from other modelling approaches. This research focusedmainly on interactions between two parties embedded in a network. In the presentpaper, I extend a closely related model towardsN-person collective good problems,combining conditional cooperation based on direct monitoring via network ties andobservation of group output in an uncertain environment. The focus is on a maxi-mally simple yet empirically relevant case, a core-periphery network in which onlycore-members can directly observe each other’s contributions to a collective effort,whereas peripheral members only observe a noisy signal indicating aggregated con-tributions. I propose the possibility of a‘rational exploitation of the core by the pe-riphery’. Strategy-profiles in which free-riding of peripheral members is toleratedwhile core-members cooperate conditionally, are not only individually rational butalso payoff-superior to profiles with universal conditional cooperation if uncer-tainty is sufficiently high and the number of peripheral members is sufficiently low.
Original languageEnglish
Title of host publicationAdvances in the Sociology of Trust and Cooperation
Subtitle of host publicationTheory, Experiments, and Field Studies
EditorsVincent Buskens, Rense Corten, Chris Snijders
PublisherDe Gruyter
Chapter5
Pages91-112
Number of pages22
ISBN (Electronic)9783110647495
ISBN (Print)9783110647013
DOIs
Publication statusPublished - Oct-2020

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