Reward and punishment

Minigames capturing the essence of Public Goods experiments show that even in the absence of rationality assumptions, both punishment and reward will fail to bring about prosocial behavior. This result holds in particular for the well-known Ultimatum Game, which emerges as a special case. But reputa tion can induce fairness and cooperation in populations adapting through le arning or imitation. Indeed, the inclusion of reputation effects in the cor responding dynamical models leads to the evolution of economically producti ve behavior, with agents contributing to the public good and either punishi ng those who do not or rewarding those who do. Reward and punishment corres pond to two types of bifurcation with intriguing complementarity. The analy sis suggests that reputation is essential for fostering social behavior amo ng selfish agents, and that it is considerably more effective with punishme nt than with reward.