Internal Reinforcement of Cooperative Outcomes: Evidence from Virtual Worlds

Abstract

Whereas game-theoretic experiments take place in an equilibrium framework in which meaningful change can come from outside observers, the real world is not so fortunate. This paper provides an empirical example of how real people, when given the sufficient time and space not usually afforded in laboratory settings, can and do internally develop institutions that act to change the game-theoretic payoffs they face in order to reinforce cooperative outcomes absent outside intervention. To do so I first introduce virtual reality as an empirical platform for economic analysis and draw on the largely yet-untapped realm of virtual online computer games.

Keywords: Emergent Order, Institutions, Law and Economics

JEL Classification: O17, K