Evolution and Revolution

Abstract

This article considers the problem of how cooperative norms can be established by modeling the evolution of a system of corruption. A fixed population of players is assumed that play a series of supergames with randomly chosen opponents. Each stage game in the supergames is a prisoner's dilemma. This article exhibits the conditions under which an equilibrium of corruption exists and is stable. There are two types of players, adaptive and nonadaptive ones. Among the nonadaptive players, there is a small proportion that always chooses to be conditionally honest in every new supergame. Furthermore, corruption generates small but cumulative social costs. This article shows that the joint presence of a small group of “honest” players and of cumulative social costs is sufficient to drive the system to a critical (i.e., catastrophis) point in which the stable equilibrium of corruption suddenly becomes unstable. When the system has reached such a catastrophic point, a small perturbation is enough to drive it toward a different equilibrium. The new equilibrium is cooperative, in that all players choose to be conditionally honest and that a cooperative equilibrium is always stable under the model's conditions. Thus the catastrophic transition to the new equilibrium exemplifies a sudden and spontaneous establishment of a cooperative pattern of behavior.