Por Favor? Favor Reciprocation When Agents Have Private Discounting

Contents

When agents can significantly increase other agents' utility at a moderate cost, the socially optimal outcome is for all agents to repeatedly provide favors to each other whenever they can. However, when agents cannot support or enforce a market system, this forms a situation similar to the repeated prisoner's dilemma because each agent can unilaterally improve its own utility by refusing to help others. We present an adaptive tit-for-tat strategy that provides a mutually beneficial equilibrium in the general cases when agents may have differing private discount factors and when favor costs and benefits are stochastic and asymmetric. This strategy allows agents to treat previously unencountered agents with caution, communicate about the trustworthiness of other agents, and evaluate past communication for deception. We discuss the details of the strategy, analytic and simulation results, and the impact of various parameterizations. We analyze one form of communication in detail and find that it causes agents to be more protective of utility.