PUNISHMENT MAKES LARGE-SCALE MARKETS POSSIBLE
PUNISHMENT MAKES LARGE-SCALE MARKETS POSSIBLE

Summary/Abstract: In this paper we discuss some experimental results which go against predictions of game theory and show how those results can be explained by incorporating norms into economic explanations. We justify the claim that norms are responsible for cooperative behavior. Finally, using evolutionary game theory and computer simulations we investigate the evolutionary stability of some simple strategies governing cooperation and show the importance of punishment for the persistence of cooperative strategies.

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