Separate essays on entrepreneurship, joint venturing, and trade comprise this thesis. The emergence of entrepreneurship is common in the real world but relatively less so in classical economic models. If industry incumbents are attributed with full rationality and perfect foresight, then there are few, if any, profitable opportunities left for new entrants (entrepreneurs) to exploit. This essay explains how entrepreneurs can emerge in a dynamic world when firms must choose between a technology strategy that is either statically or dynamically efficient. A model is developed which shows how such opportunities for new entry can occur when incumbents are caught in a Prisoners’ Dilemma game involving technology strategy. A relevance measure and policy implications are then explored. Joint ventures, especially of the R&D type, are becoming increasingly important as a way to gain needed technological and market competencies. Unfortunately, many joint ventures have the characteristics of a Prisoners’ Dilemma. Firms may cooperate or defect in the venture. If contracts, side-payments, and third-party verification of the venture outcome are unavailable, then the dominant solution to the Prisoners’ Dilemma (mutual defection) results. This paper proposes the use of an ex-ante auction to obtain a Pareto-improvement for these ventures. A Pareto-improvement is assured when non-transferable costs and benefits of firms are not conditional on joint venture strategies. When this condition is not met restrictions are required to obtain the Pareto-improvement. The problem of trade between countries that share an international open access resource is becoming significant as the world reaches the limits of critical shared resource stocks. It is modelled as a world with one primary factor, two intermediate goods, one final good (harvested from the open access resource), and two nations where it is assumed that either the trading takes place over one stage (nations are price-takers), or two stages (nations have market power). Imperfect competition and open access generated externalities affect the trading efficiency. To maximize world welfare this essay recommends subsidizing R&D where comparative advantage exists, and creating international agreements to ensure the one-stage game structure is used when trading. / Business, Sauder School of / Graduate

Prisoner's Dilemma is a game theory model used to describe altruistic behavior seen in various populations. This theoretical game is important in understanding why a seemingly selfish strategy does persist and spread throughout a population that is mixing homogeneously at random. For a population with structure determined by social interactions, Prisoner's Dilemma brings to light certain requirements for the altruistic strategy to become established. Monte Carlo simulations of Prisoner's Dilemma are carried out using both simulated social networks and a dataset of a real social network. In both scenarios we confirm the requirements for the persistence of altruism in a population.

Prisoner's Dilemma is a game theory model used to describe altruistic behavior seen in various populations. This theoretical game is important in understanding why a seemingly selfish strategy does persist and spread throughout a population that is mixing homogeneously at random. For a population with structure determined by social interactions, Prisoner's Dilemma brings to light certain requirements for the altruistic strategy to become established. Monte Carlo simulations of Prisoner's Dilemma are carried out using both simulated social networks and a dataset of a real social network. In both scenarios we confirm the requirements for the persistence of altruism in a population.

In evolutionary theory the existence of self-sacrificing cooperative traits poses a problem that has engendered decades of debate. The principal theories of the evolution of altruism are inclusive fitness, reciprocal altruism, and multilevel selection. To provide a framework for the unification o f these apparently disparate theories, this dissertation identifies two fundamental conditions required for the evolution of altruism: 1) non-zero-sum fitness benefits for cooperation and 2) positive assortment among altruistic behaviors. I demonstrate the underlying similarities in these three theories in the following two ways. First, I show that the game-theoretic model of the prisoner’s dilemm a (PD) is inherent to all three theories. While the PD has been used extensively to model reciprocal altruism, I demonstrate that the n-player PD captures fundamental aspects o f multilevel selection and inclusive fitness in that NPD model parameters relate simply to Simpson’s paradox, the Price covariance equation, and Hamilton’s rule. The tension between hierarchical levels that defines a PD reflects the tension between Abstract levels o f selection that is explicit in multilevel selection theory, and im plicit in the other two theories. Second, Ham ilton’s rule from inclusive fitness theory applies to the other theories. As mentioned, I demonstrate that this rule relates to multilevel selection via the NPD. I also show that Queller’s generalization of Hamilton’s rule applies to the conditional strategies of reciprocal altmism. This challenges the selfish-gene viewpoint by highlighting the fact that it is the phenotypes o f others, not their genotypes, that is critical to the evolution o f altruism. I integrate the PD and H am ilton’s rule as follows: the evolution o f altruism in general involves PD situations in which Hamilton’s rule specifies the necessary relationship between 1) the degree of non-zero-sumness within the PD and 2) the degree of positive assortment among altruistic behaviors. Additional contributions of this research include a demonstration that randomly formed associations can provide the necessary positive assortment for strong altruism to evolve, the development of a new selection decomposition that is symmetrical to the Price equation, and a game-theoretic analysis showing the essential similarity of weak and strong altruism under selection.

This research details a point of reference to understand two case studies of cooperation that developed among lower-level, or non policy-making bureaucrats during times of conflict or war. Using components of game theory, I propose that when an international conflictual relationship occurs that resembles an iterated Prisoners' Dilemma, and that meets certain conditions, tacit cooperation can emerge. Tacit cooperation consists of illicit or implied cooperation that is not sanctioned at the national policy level.In this research I develop a framework of tacit cooperation, relying heavily upon Robert Axelrod's theory of evolutionary cooperation. With the framework in place, I then explicate two international case studies, World War I trench warfare cooperation and the INF "walk in the woods" between Kvitsinsky and Nitze, to show how the theory can be used to describe ways that cooperation can occur in a hostile or conflictual environment.

This dissertation aims to contribute to the literature of cooperation and social preferences. We use experimental and computational methods to understand the role and extent of reciprocity on cooperation. The first paper is a methodological contribution to the large literature on conditional preferences of cooperation. Cooperation generated by this type of preferences is notoriously unstable, as individuals reduce their contributions to the public good in reaction to other subjects' free-riding. This has led to the widely-shared conclusion that cooperation observed in experiments (and its collapse) is mostly driven by imperfect reciprocity. In this study, we explore the possibility that reciprocally cooperative preferences may themselves be unstable. We do so by observing the evolution of subjects' preferences in an anonymously repeated social dilemma. Our unsettling result is that, in the course of the experiment, a significant fraction of reciprocally cooperative subjects become egoistic, while the reverse is rarely observed. The non-selfish preferences that appear to be more stable are those most easily attributed to confusion. We are thus driven to the conclusion that egoism is more resistant to exposure to social dilemmas than reciprocity. The second paper the evolutionary success of conditional preferences by using simulations. We use an agent-based model in which agents play a variation of the iterated Prisoner's Dilemma game. We estimate the likelihood of cooperation levels as well as the likelihood of the existence of conditional types for different continuation probabilities. We show that an all-or-none type of conditional cooperation strategy together with the perfect conditional cooperation strategy are most likely to emerge when the continuation probability is sufficiently high. Our most surprising finding is related to the so-called hump-shaped strategy, a conditional type that is commonly observed in experiments. Our simulations show that those types are likely to thrive for intermediate levels of the continuation probability due to their relative advantage when probability of interaction is not enough to sustain a full-cooperation, but instead merely sustains mid-level cooperation. The third paper aims to understand the underlying reciprocal motives in altruistic behavior. We argue that the altruism that is revealed in dictator games can be explained by what we call presumptive reciprocity. Subjects may display non-selfish preferences because they presume that the other subjects would have revealed similar, non-selfish preferences if the roles had been reversed. This kind of intuitive reasoning, although partially captured by indirect reciprocity, is overlooked in the literature on social preferences, especially when it comes to explaining the behavior that appears to be purely altruistic. The experimental evidence we provide shows that people's choices reveal mostly presumptive reciprocity, while purely altruistic preferences play a much smaller role.

<p>The Thesis analyzes the effecvtiveness of international environmental regimes. A case study of four of the most important river regimes in Germany - the Commissions for the Protection of the Rhine (ICPR), Elbe (ICPE), Oder (ICPO) and Lake Constance (IGKB)- was conducted. The first part of the thesis explains the theoretical foundation the thesis rests upon. Neoliberal Institutionalism was the chosen theory, accompanied by aspects of regime and game theory. A definition of effectiveness was generated, taking into account a legal, a historical and a political perspective. The Thesis is a qualitative case study, which uses mainly sources from books, essays, newspapers and few in-depth interviews with people inside the Commissions. In the second part the International Commissions are analyzed. In the end the findings are compared to find out what constitutes an effective regime. All four regimes have made an significant impact though. An effective regime is - according to the findings of this thesis - characterized by different factors: a small number of actors, a strong legal basis for the daily work routines, similar background of the member states, favorable national conditions.</p>

The Thesis analyzes the effecvtiveness of international environmental regimes. A case study of four of the most important river regimes in Germany - the Commissions for the Protection of the Rhine (ICPR), Elbe (ICPE), Oder (ICPO) and Lake Constance (IGKB)- was conducted. The first part of the thesis explains the theoretical foundation the thesis rests upon. Neoliberal Institutionalism was the chosen theory, accompanied by aspects of regime and game theory. A definition of effectiveness was generated, taking into account a legal, a historical and a political perspective. The Thesis is a qualitative case study, which uses mainly sources from books, essays, newspapers and few in-depth interviews with people inside the Commissions. In the second part the International Commissions are analyzed. In the end the findings are compared to find out what constitutes an effective regime. All four regimes have made an significant impact though. An effective regime is - according to the findings of this thesis - characterized by different factors: a small number of actors, a strong legal basis for the daily work routines, similar background of the member states, favorable national conditions.

Indirect reciprocity describes a class of reputation-based mechanisms which may explain the prevalence of cooperation in groups where partners meet only once. The first model for which this has analytically been shown was the binary image scoring mechanism, where one's reputation is only based on one's last action. But this mechanism is known to fail if errors in implementation occur. It has thus been claimed that for indirect reciprocity to stabilize cooperation, reputation assessments must be of higher order, i.e. contingent not only on past actions, but also on the reputations of the targets of these actions. We show here that this need not be the case. A simple image scoring mechanism where more than just one past action is observed provides ample possibilities for stable cooperation to emerge even under substantial rates of implementation errors. (authors' abstract) / Series: Department of Economics Working Paper Series

Indirect reciprocity describes a class of reputation-based mechanisms which may explain the prevalence of cooperation in large groups where partners meet only once. The first model for which this has been demonstrated was the image scoring mechanism. But analytical work on the simplest possible case, the binary scoring model, has shown that even small errors in implementation destabilize any cooperative regime. It has thus been claimed that for indirect reciprocity to stabilize cooperation, assessments of reputation must be based on higher-order information. Is indirect reciprocity relying on frst-order information doomed to fail? We use a simple analytical model of image scoring to show that this need not be the case. Indeed, in the general image scoring model the introduction of implementation errors has just the opposite effect as in the binary scoring model: it may stabilize instead of destabilize cooperation.