Indignation and the Evolution of Cooperation Norms

Abstract

This study examines the role of anger and indignation in upholding cooperation in society. I model indignation in a population psychological game and characterize the stochastically stable equilibrium in a noisy best-reply dynamic. Two results are obtained. First, indignation can sustain cooperation in the long run, irrespective of whether interactions are global or occur within a fixed local interaction structure. Second, mobility between communities promotes the emergence, growth, and persistence of cooperative communities. This leads to positive correlations among mobility, community size, cooperation, and the punishment of defectors. This study is among the first to apply stochastic stability to address the issue of multiple equilibria in psychological games.

Keywords: Social norms, cooperation, costly punishment, stochastic dynamics, stochastic stability, psychological game

JEL Classification: C73, D63, H41