EVOLUTION AND REVOLUTION - THE DYNAMICS OF CORRUPTION

This article considers the problem of how cooperative norms can be est ablished by modeling the evolution of a system of corruption. A fixed population of players is assumed that play a series of supergames with randomly chosen opponents. Each stage game in the supergames is a pri soner's dilemma. This article exhibits the conditions under which an e quilibrium of corruption exists and is stable. There are two types of players, adaptive and nonadaptive ones. Among the nonadaptive players, there is a small proportion that always chooses to be conditionally h onest in every new supergame. Furthermore, corruption generates small but cumulative social costs. This article shows that the joint presenc e of a small group of ''honest'' players and of cumulative social cost s is sufficient to drive the system to a critical (i.e., catastrophic) point in which the stable equilibrium of corruption suddenly becomes unstable. When the system has reached such a catastrophic point, a sma ll perturbation is enough to drive it toward a different equilibrium. The new equilibrium is cooperative, in that all players choose to be c onditionally honest and that a cooperative equilibrium is always stabl e under the model's conditions. Thus the catastrophic transition to th e new equilibrium exemplifies a sudden and spontaneous establishment o f a cooperative pattern of behavior.