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Published on: August 25, 2023
646
Third party interventions promote cooperation on the interdependent networks: A perspective based on prospect theory
Yu'e Wu1, Zhiqiang Li2, Zeyun Liu1
1School of Management Science and Engineering, Tianjin University of Finance and Economics, Tianjin 300222, China.
Chaos (Woodbury, N.Y.)
|October 7, 2024
Summary
Third-party intervention effectively promotes cooperation by considering disputants' perceived gains and losses, as explained by prospect theory. Higher intervention intensity and lower costs lead to greater cooperation.
Area of Science:
- Social Sciences
- Game Theory
- Behavioral Economics
Background:
- Third-party intervention is crucial for conflict resolution and cooperation.
- Disputants' decisions are influenced by perceived, not actual, outcomes of interventions.
- Prospect theory offers a framework to understand decision-making under risk.
Purpose of the Study:
- To explore cooperation dynamics using prospect theory in a system with third-party interveners and disputants.
- To model the impact of perceived gains and losses on cooperative strategy adoption.
- To analyze the formation and maintenance of cooperation in interdependent networks.
Main Methods:
- Introduction of prospect theory to model disputant decision-making.
- Simulation of a system with two interdependent networks: interveners and disputants.
- Incorporation of a prisoner's dilemma game with third-party punishment for defectors.
Main Results:
- Third-party intervention, guided by prospect theory, reduces conflict and enhances cooperation.
- Cooperation levels are inversely related to intervention costs.
- Cooperation levels are directly related to intervention intensity.
Conclusions:
- Prospect theory-informed interventions can effectively mediate disputes.
- Third parties should consider disputants' risk attitudes for successful mediation.
- Understanding perceived outcomes is key to fostering cooperation in conflict resolution.
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