Exact cluster dynamics of indirect reciprocity in complete graphs

Heider's balance theory emphasizes cognitive consistency in assessing others, as expressed by the phrase "The enemy of my enemy is my friend." At the same time, the theory of indirect reciprocity provides us with a dynamical framework to study how to assess others based on their actions as well as how to act toward them based on the assessments. Well known are the "leading eight" from L1 to L8, the eight norms for assessment and action to foster cooperation in social dilemmas while resisting the invasion of mutant norms prescribing alternative actions. In this work, we begin by showing that balance is equivalent to stationarity of dynamics only for L4 and L6 (stern judging) among the leading eight. Stern judging reflects an intuitive idea that good merits reward, whereas evil warrants punishment. By analyzing the dynamics of stern judging in complete graphs, we prove that this norm almost always segregates the graph into two mutually hostile groups as the graph size grows. We then compare L4 with stern judging: The only difference of L4 is that a good player's cooperative action toward a bad one is regarded as good. This subtle difference transforms large populations governed by L4 to a "paradise" where cooperation prevails and positive assessments abound. Our study thus helps us understand the relationship between individual norms and their emergent consequences at a population level, shedding light on the nuanced interplay between cognitive consistency and segregation dynamics.