RECIPROCITY AND EFFICIENCY

Abstract

Social orientations open up niches for voluntary cooperation. This hypothesis is examined with respect to actors in social dilemmas who have internalized the norm of reciprocity. If the intensity of the social motivation stays within certain limits, efficiency enhancing cooperation evolves. In the ultimatum game and in the battle of the sexes, reciprocity brings about an Equal Split of the social surplus and the behavior pattern known as Turn Taking where the actors alternately win and lose. Moreover, as the battle of the sexes demonstrates, strong social motivations create new predicaments and material inefficiencies unknown in a society of egotistical actors. The reciprocity norm is embedded in a social psychological process called relationship accounting. Relationship accounting transforms repeated games into state-space games, such that, e.g. in a finitely repeated state-space prisoners' dilemma players first cooperate and then switch to non-cooperation in the endgame.