Asymmetric Power Boosts Extortion in an Economic Experiment

Abstract

Direct reciprocity is a major mechanism for the evolution of cooperation. Several classical studies have suggested that humans should quickly learn to adopt reciprocal strategies to establish mutual cooperation in repeated interactions. On the other hand, the recently discovered theory of ZD strategies has found that subjects who use extortionate strategies are able to exploit and subdue cooperators. Although such extortioners have been predicted to succeed in any population of adaptive opponents, theoretical follow-up studies questioned whether extortion can evolve in reality. However, most of these studies presumed that individuals have similar strategic possibilities and comparable outside options, whereas asymmetries are ubiquitous in real world applications. Here we show with a model and an economic experiment that extortionate strategies readily emerge once subjects differ in their strategic power. Our experiment combines a repeated social dilemma with asymmetric partner choice. In our main treatment there is one randomly chosen group member who is unilaterally allowed to exchange one of the other group members after every ten rounds of the social dilemma. We find that this asymmetric replacement opportunity generally promotes cooperation, but often the resulting payoff distribution reflects the underlying power structure. Almost half of the subjects in a better strategic position turn into extortioners, who quickly proceed to exploit their peers. By adapting their cooperation probabilities consistent with ZD theory, extortioners force their co-players to cooperate without being similarly cooperative themselves. Comparison to non-extortionate players under the same conditions indicates a substantial net gain to extortion. Our results thus highlight how power asymmetries can endanger mutually beneficial interactions, and transform them into exploitative relationships. In particular, our results indicate that the extortionate strategies predicted from ZD theory could play a more prominent role in our daily interactions than previously thought.