Category: Indirect Reciprocity

Indirect Reciprocity and Image Scores

Recently, while researching reputation attacks that could threaten currency brand indexes, I happened across another perspective that I feel compelled to study and learn.

Nowak and Sigmund’s article in Nature magazine discusses the evolution of indirect reciprocity in the context of hunter/gatherer populations. An idea that immediately comes to mind is that currency is an attempt to externalize image scores. Others have also realized that connection, and besides another blog, there is even a published article on money as externalization of confidence (unfortunately for me, I do not read Japanese).

In hindsight, I could see how Prowl is just another attempt to scale indirect reciprocity by tracing reputation to a market entity’s domain name, exposing helper-recipient interactions to declared and random observers through PaCT, and promoting auditable reputations through parsable reports. The extended sequence of PaCT even illustrates how a reporter may query for advisories on whether to accept or reject a transaction opportunity, which is analogous to the decision to help others or not. It should not matter whether a transaction is called a sale, charity or paid service — the recipient (e.g., buyer) still receives a benefit and the originator (e.g., seller or donor) still accrues the cost in hopes of improving her long-term fitness (through redeemable reputation tokens or supporting others who make life better, more satisfying.)

Reading through research and literature published on the evolution of cooperation, it’s amazing to see theories and scoring strategies objectively compared using accepted frameworks for modeling, simulation and experimental studies. I see the concept of scoring strategies (image scoring, standing, etc.) as analogous to currency design. Good currency designs, like good scoring strategies, are more likely to persist in simulations and actual implementations.

My take-away lesson from evolutionary game theory is that overall fitness determines selection, and not the amount of tokens or currency that is owned by an individual. That perspective runs contrary to most economic game theory that uses the accumulation of money as the quantitative measure of success. Evolutionary selection by accrued fitness seems more natural. I was inspired enough to create a basic simulation program for modeling the spread of benefits/costs in a population that uses a particular currency design. However, I am still unsure of how to model selection in a saturated market population. I don’t think evolutionary selection is representative of the situation wherein market participants are cognizant of various currency designs that they would like to earn and use.