Promoting cooperation by preventing exploitation: The role of network structure

A growing body of empirical evidence indicates that social and cooperative behavior can be affected by cognitive and neurological factors, suggesting the existence of state-based decision-making mechanisms that may have emerged by evolution. Motivated by these observations, we propose a simple mechanism of anonymous network interactions identified as a form of generalized reciprocity - a concept organized around the premise "help anyone if helped by someone", and study its dynamics on random graphs. In the presence of such mechanism, the evolution of cooperation is related to the dynamics of the levels of investments (i.e. probabilities of cooperation) of the individual nodes engaging in interactions. We demonstrate that the propensity for cooperation is determined by a network centrality measure here referred to as neighborhood importance index and discuss relevant implications to natural and artificial systems. To address the robustness of the state-based strategies to an invasion of defectors, we additionally provide an analysis which redefines the results for the case when a fraction of the nodes behave as unconditional defectors.Comment: 11 pages, 5 figure

Correlation Patterns in Foreign Exchange Markets

The value of an asset in a financial market is given in terms of another asset known as numeraire. The dynamics of the value is non-stationary and hence, to quantify the relationships between different assets, one requires convenient measures such as the means and covariances of the respective log returns. Here, we develop transformation equations for these means and covariances when one changes the numeraire. The results are verified by a thorough empirical analysis capturing the dynamics of numerous assets in a foreign exchange market. We show that the partial correlations between pairs of assets are invariant under the change of the numeraire. This observable quantifies the relationship between two assets, while the influence of the rest is removed. As such the partial correlations uncover intriguing observations which may not be easily noticed in the ordinary correlation analysis

Emergence of Cooperation in Decentralized Wireless Networks

The paper investigates the mechanisms for promotion of cooperation in decentralized wireless networks. The main objective is to determine whether cooperation can emerge in these networks in the same way it emerges in biological systems. The approach is motivated by recent results in evolutionary biology which suggest that cooperation can be favored by natural selection, if a certain mechanism is at work. We are interested in promoting cooperation based on simple rules, in contrast to most of the approaches which enforce cooperation by using complex algorithms and require strategic complexity of the network nodes. We present a model of a wireless network as a graph, and associate benefits and costs with the strategy that the network users follow at a certain time instant (cooperation or defection). We define fitness function based on the amount of power each node has to transmit and allow the users to update their strategy based on the observed change of fitness. The objective is to demonstrate that cooperative behavior, if introduced by chance, can persists over time in the wireless network

Energy-efficiency in decentralized wireless networks: A game-theoretic approach inspired by evolutionary biology

Energy efficiency is gaining importance in wireless communication networks which have nodes with limited energy supply and signal processing capabilities. We present a numerical study of cooperative communication scenarios based on simple local rules. This is in contrast to most of the approaches in the literature which enforce cooperation by using complex algorithms and require strategic complexity of the network nodes. The approach is motivated by recent results in evolutionary biology which suggest that, if certain mechanism is at work, cooperation can be favored by natural selection, i. e. even selfish actions of the individual nodes can lead to emergence of cooperative behavior in the network. The results of the simulations in the context of wireless communication networks verify these observations and indicate that uncomplicated local rules, followed by simple fitness evaluation, can generate network behavior which yields global energy efficiency