The dynamics of a duopoly Stackelberg game with marginal costs among heterogeneous players.

One of the famous economic models in game theory is the duopoly Stackelberg model, in which a leader and a follower firm manufacture a single product in the market. Their goal is to obtain the maximum profit while competing with each other. The desired dynamics for a firm in a market is the convergence to its Nash equilibrium, but the dynamics of real-world markets are not always steady and can result in unpredictable market changes that exhibit chaotic behaviors. On the other hand, to approach reality more, the two firms in the market can be considered heterogeneous. The leader firm is bounded rationale, and the follower firm is adaptable. Modifying the cost function that affects the firms' profit by adding the marginal cost term is another step toward reality. We propose a Stackelberg model with heterogeneous players and marginal costs, which exhibits chaotic behavior. This model's equilibrium points, including the Nash equilibrium, are calculated by the backward induction method, and their stability analyses are obtained. The influence of changing each model parameter on the consequent dynamics is investigated through one-dimensional and two-dimensional bifurcation diagrams, Lyapunov exponents spectra, and Kaplan-Yorke dimension. Eventually, using a combination of state feedback and parameter adjustment methods, the chaotic solutions of the model are successfully tamed, and the model converges to its Nash equilibrium.

Age and market capitalization drive large price variations of cryptocurrencies.

Cryptocurrencies are considered the latest innovation in finance with considerable impact across social, technological, and economic dimensions. This new class of financial assets has also motivated a myriad of scientific investigations focused on understanding their statistical properties, such as the distribution of price returns. However, research so far has only considered Bitcoin or at most a few cryptocurrencies, whilst ignoring that price returns might depend on cryptocurrency age or be influenced by market capitalization. Here, we therefore present a comprehensive investigation of large price variations for more than seven thousand digital currencies and explore whether price returns change with the coming-of-age and growth of the cryptocurrency market. We find that tail distributions of price returns follow power-law functions over the entire history of the considered cryptocurrency portfolio, with typical exponents implying the absence of characteristic scales for price variations in about half of them. Moreover, these tail distributions are asymmetric as positive returns more often display smaller exponents, indicating that large positive price variations are more likely than negative ones. Our results further reveal that changes in the tail exponents are very often simultaneously related to cryptocurrency age and market capitalization or only to age, with only a minority of cryptoassets being affected just by market capitalization or neither of the two quantities. Lastly, we find that the trends in power-law exponents usually point to mixed directions, and that large price variations are likely to become less frequent only in about 28% of the cryptocurrencies as they age and grow in market capitalization.

Risk assessment of COVID-19 epidemic resurgence in relation to SARS-CoV-2 variants and vaccination passes.

The introduction of COVID-19 vaccination passes (VPs) by many countries coincided with the Delta variant fast becoming dominant across Europe. A thorough assessment of their impact on epidemic dynamics is still lacking. Here, we propose the VAP-SIRS model that considers possibly lower restrictions for the VP holders than for the rest of the population, imperfect vaccination effectiveness against infection, rates of (re-)vaccination and waning immunity, fraction of never-vaccinated, and the increased transmissibility of the Delta variant. Some predicted epidemic scenarios for realistic parameter values yield new COVID-19 infection waves within two years, and high daily case numbers in the endemic state, even without introducing VPs and granting more freedom to their holders. Still, suitable adaptive policies can avoid unfavorable outcomes. While VP holders could initially be allowed more freedom, the lack of full vaccine effectiveness and increased transmissibility will require accelerated (re-)vaccination, wide-spread immunity surveillance, and/or minimal long-term common restrictions.

The benefits, costs and feasibility of a low incidence COVID-19 strategy.

In the summer of 2021, European governments removed most NPIs after experiencing prolonged second and third waves of the COVID-19 pandemic. Most countries failed to achieve immunization rates high enough to avoid resurgence of the virus. Public health strategies for autumn and winter 2021 have ranged from countries aiming at low incidence by re-introducing NPIs to accepting high incidence levels. However, such high incidence strategies almost certainly lead to the very consequences that they seek to avoid: restrictions that harm people and economies. At high incidence, the important pandemic containment measure 'test-trace-isolate-support' becomes inefficient. At that point, the spread of SARS-CoV-2 and its numerous harmful consequences can likely only be controlled through restrictions. We argue that all European countries need to pursue a low incidence strategy in a coordinated manner. Such an endeavour can only be successful if it is built on open communication and trust.

COVID-19 Vaccine Boosters: The Good, the Bad, and the Ugly.

Pursuing vaccinations against COVID-19 brings hope to limit the spread of SARS-CoV-2 and remains the most rational decision under pandemic conditions. However, it does not come without challenges, including temporary shortages in vaccine doses, significant vaccine inequity, and questions regarding the durability of vaccine-induced immunity that remain unanswered. Moreover, SARS-CoV-2 has undergone evolution with the emergence of its novel variants, characterized by enhanced transmissibility and ability to at least partially evade neutralizing antibodies. At the same time, serum antibody levels start to wane within a few months after vaccination, ultimately increasing the risk of breakthrough infections. This article discusses whether the administration of booster doses of COVID-19 vaccines is urgently needed to control the pandemic. We conclude that, at present, optimizing the immunity level of wealthy populations cannot come at the expense of low-income regions that suffer from vaccine unavailability. Although the efficiency of vaccination in protecting from infection may decrease over time, current data show that efficacy against severe disease, hospitalization, and death remains at a high level. If vaccine coverage continues at extremely low levels in various regions, including African countries, SARS-CoV-2 may sooner or later evolve into variants better adapted to evade natural and vaccine-induced immunity, ultimately bringing a global threat that, of course, includes wealthy populations. We offer key recommendations to increase vaccination rates in low-income countries. The pandemic is, by definition, a major epidemiological event and requires looking beyond one's immediate self-interest; otherwise, efforts to contain it will be futile.

Bilateral costly expulsions resolve the public goods dilemma.

Expulsion has been found to promote cooperation in social dilemmas, but only if it does not incur costs or is applied unilaterally. Here, we show that removing both conditions leads to a spontaneous resolution of the costly expulsion problem. Namely, by studying the public goods game where cooperators and defectors can expel others at a personal cost, we find that public cooperation thrives as expulsion costs increase. This is counterintuitive, as the cost of other-regarding behaviour typically places an additional burden on cooperation, which is in itself costly. Such scenarios are referred to as second-order free-rider problems, and they typically require an additional mechanism, such as network reciprocity, to be resolved. We perform a mean field analysis of the public goods game with bilateral costly expulsion, showing analytically that the expected payoff difference between cooperators and defectors increases with expulsion costs as long as players with the same strategy have, on average, a higher frequency to interact with each other. As the latter condition is often satisfied in social networks, our results thus reveal a fascinating new path to public cooperation, and they show that the costs of well-intended actions need not be low for them to be effective.

The evolution of lying in well-mixed populations.

Lies can have profoundly negative consequences for individuals, groups and even for societies. Understanding how lying evolves and when it proliferates is therefore of significant importance for our personal and societal well-being. To that effect, we here study the sender-receiver game in well-mixed populations with methods of statistical physics. We use the Monte Carlo method to determine the stationary frequencies of liars and believers for four different lie types. We consider altruistic white lies that favour the receiver at a cost to the sender, black lies that favour the sender at a cost to the receiver, spiteful lies that harm both the sender and the receiver, and Pareto white lies that favour both the sender and the receiver. We find that spiteful lies give rise to trivial behaviour, where senders quickly learn that their best strategy is to send a truthful message, while receivers likewise quickly learn that their best strategy is to believe the sender's message. For altruistic white lies and black lies, we find that most senders lie while most receivers do not believe the sender's message, but the exact frequencies of liars and non-believers depend significantly on the payoffs, and they also evolve non-monotonically before reaching the stationary state. Lastly, for Pareto white lies we observe the most complex dynamics, with the possibility of both lying and believing evolving with all frequencies between 0 and 1 in dependence on the payoffs. We discuss the implications of these results for moral behaviour in human experiments.

Role-separating ordering in social dilemmas controlled by topological frustration.

''Three is a crowd" is an old proverb that applies as much to social interactions as it does to frustrated configurations in statistical physics models. Accordingly, social relations within a triangle deserve special attention. With this motivation, we explore the impact of topological frustration on the evolutionary dynamics of the snowdrift game on a triangular lattice. This topology provides an irreconcilable frustration, which prevents anticoordination of competing strategies that would be needed for an optimal outcome of the game. By using different strategy updating protocols, we observe complex spatial patterns in dependence on payoff values that are reminiscent to a honeycomb-like organization, which helps to minimize the negative consequence of the topological frustration. We relate the emergence of these patterns to the microscopic dynamics of the evolutionary process, both by means of mean-field approximations and Monte Carlo simulations. For comparison, we also consider the same evolutionary dynamics on the square lattice, where of course the topological frustration is absent. However, with the deletion of diagonal links of the triangular lattice, we can gradually bridge the gap to the square lattice. Interestingly, in this case the level of cooperation in the system is a direct indicator of the level of topological frustration, thus providing a method to determine frustration levels in an arbitrary interaction network.

Stochastic win-stay-lose-shift strategy with dynamic aspirations in evolutionary social dilemmas.

In times of plenty expectations rise, just as in times of crisis they fall. This can be mathematically described as a win-stay-lose-shift strategy with dynamic aspiration levels, where individuals aspire to be as wealthy as their average neighbor. Here we investigate this model in the realm of evolutionary social dilemmas on the square lattice and scale-free networks. By using the master equation and Monte Carlo simulations, we find that cooperators coexist with defectors in the whole phase diagram, even at high temptations to defect. We study the microscopic mechanism that is responsible for the striking persistence of cooperative behavior and find that cooperation spreads through second-order neighbors, rather than by means of network reciprocity that dominates in imitation-based models. For the square lattice the master equation can be solved analytically in the large temperature limit of the Fermi function, while for other cases the resulting differential equations must be solved numerically. Either way, we find good qualitative agreement with the Monte Carlo simulation results. Our analysis also reveals that the evolutionary outcomes are to a large degree independent of the network topology, including the number of neighbors that are considered for payoff determination on lattices, which further corroborates the local character of the microscopic dynamics. Unlike large-scale spatial patterns that typically emerge due to network reciprocity, here local checkerboard-like patterns remain virtually unaffected by differences in the macroscopic properties of the interaction network.

Equivalences in Biological and Economical Systems: Peloton Dynamics and the Rebound Effect.

An interdisciplinary bridge is proposed between principles of collective behavior in biological systems, particularly bicycle pelotons, and the economic phenomenon called the rebound effect. Two main equivalencies are proposed between aspects of peloton dynamics and aspects of energy service efficiencies and the rebound effect. Firstly, a threshold whereby weaker cyclists, up to maximal capacities, sustain speeds of pacesetters by drafting; equivalent to a threshold whereby consumers will not exceed maximum allocated budgets for energy services, costs for which are externally determined. Secondly, a threshold of peloton dynamics whereby, below this threshold, weaker cyclists share costly non-drafting positions, whereas above this threshold cyclists cannot share these positions but can sustain pacesetter speeds. This is in turn equivalent to the threshold in the context of energy service efficiency, whereby consumers will increase spending to the limit indicated by the rebound magnitude but not to their maximum allocated budgets. These thresholds are a consequence of the model equations, and the latter threshold is explained by consumer apprehension that existing energy efficiencies could disappear or be negative, when consumers would be over budget. This partly explains long term rebound increase, whereby consumers increase consumption as confidence rises that cost savings due to energy service efficiency is stable.

Competition and cooperation among different punishing strategies in the spatial public goods game.

Inspired by the fact that people have diverse propensities to punish wrongdoers, we study a spatial public goods game with defectors and different types of punishing cooperators. During the game, cooperators punish defectors with class-specific probabilities and subsequently share the associated costs of sanctioning. We show that in the presence of different punishing cooperators the highest level of public cooperation is always attainable through a selection mechanism. Interestingly, the selection does not necessarily favor the evolution of punishers who would be able to prevail on their own against the defectors, nor does it always hinder the evolution of punishers who would be unable to prevail on their own. Instead, the evolutionary success of punishing strategies depends sensitively on their invasion velocities, which in turn reveals fascinating examples of both competition and cooperation among them. Furthermore, we show that under favorable conditions, when punishment is not strictly necessary for the maintenance of public cooperation, the less aggressive, mild form of sanctioning is the sole victor of the selection process. Our work reveals that natural strategy selection cannot only promote, but sometimes also hinders competition among prosocial strategies.

A double-edged sword: Benefits and pitfalls of heterogeneous punishment in evolutionary inspection games.

As a simple model for criminal behavior, the traditional two-strategy inspection game yields counterintuitive results that fail to describe empirical data. The latter shows that crime is often recurrent, and that crime rates do not respond linearly to mitigation attempts. A more apt model entails ordinary people who neither commit nor sanction crime as the third strategy besides the criminals and punishers. Since ordinary people free-ride on the sanctioning efforts of punishers, they may introduce cyclic dominance that enables the coexistence of all three competing strategies. In this setup ordinary individuals become the biggest impediment to crime abatement. We therefore also consider heterogeneous punisher strategies, which seek to reduce their investment into fighting crime in order to attain a more competitive payoff. We show that this diversity of punishment leads to an explosion of complexity in the system, where the benefits and pitfalls of criminal behavior are revealed in the most unexpected ways. Due to the raise and fall of different alliances no less than six consecutive phase transitions occur in dependence on solely the temptation to succumb to criminal behavior, leading the population from ordinary people-dominated across punisher-dominated to crime-dominated phases, yet always failing to abolish crime completely.

The Matthew effect in empirical data.

The Matthew effect describes the phenomenon that in societies, the rich tend to get richer and the potent even more powerful. It is closely related to the concept of preferential attachment in network science, where the more connected nodes are destined to acquire many more links in the future than the auxiliary nodes. Cumulative advantage and success-breads-success also both describe the fact that advantage tends to beget further advantage. The concept is behind the many power laws and scaling behaviour in empirical data, and it is at the heart of self-organization across social and natural sciences. Here, we review the methodology for measuring preferential attachment in empirical data, as well as the observations of the Matthew effect in patterns of scientific collaboration, socio-technical and biological networks, the propagation of citations, the emergence of scientific progress and impact, career longevity, the evolution of common English words and phrases, as well as in education and brain development. We also discuss whether the Matthew effect is due to chance or optimization, for example related to homophily in social systems or efficacy in technological systems, and we outline possible directions for future research.

From pairwise to group interactions in games of cyclic dominance.

We study the rock-paper-scissors game in structured populations, where the invasion rates determine individual payoffs that govern the process of strategy change. The traditional version of the game is recovered if the payoffs for each potential invasion stem from a single pairwise interaction. However, the transformation of invasion rates to payoffs also allows the usage of larger interaction ranges. In addition to the traditional pairwise interaction, we therefore consider simultaneous interactions with all nearest neighbors, as well as with all nearest and next-nearest neighbors, thus effectively going from single pair to group interactions in games of cyclic dominance. We show that differences in the interaction range affect not only the stationary fractions of strategies but also their relations of dominance. The transition from pairwise to group interactions can thus decelerate and even revert the direction of the invasion between the competing strategies. Like in evolutionary social dilemmas, in games of cyclic dominance, too, the indirect multipoint interactions that are due to group interactions hence play a pivotal role. Our results indicate that, in addition to the invasion rates, the interaction range is at least as important for the maintenance of biodiversity among cyclically competing strategies.

If cooperation is likely punish mildly: insights from economic experiments based on the snowdrift game.

Punishment may deter antisocial behavior. Yet to punish is costly, and the costs often do not offset the gains that are due to elevated levels of cooperation. However, the effectiveness of punishment depends not only on how costly it is, but also on the circumstances defining the social dilemma. Using the snowdrift game as the basis, we have conducted a series of economic experiments to determine whether severe punishment is more effective than mild punishment. We have observed that severe punishment is not necessarily more effective, even if the cost of punishment is identical in both cases. The benefits of severe punishment become evident only under extremely adverse conditions, when to cooperate is highly improbable in the absence of sanctions. If cooperation is likely, mild punishment is not less effective and leads to higher average payoffs, and is thus the much preferred alternative. Presented results suggest that the positive effects of punishment stem not only from imposed fines, but may also have a psychological background. Small fines can do wonders in motivating us to chose cooperation over defection, but without the paralyzing effect that may be brought about by large fines. The later should be utilized only when absolutely necessary.

Decelerated invasion and waning-moon patterns in public goods games with delayed distribution.

We study the evolution of cooperation in the spatial public goods game, focusing on the effects that are brought about by the delayed distribution of goods that accumulate in groups due to the continuous investments of cooperators. We find that intermediate delays enhance network reciprocity because of a decelerated invasion of defectors, who are unable to reap the same high short-term benefits as they do in the absence of delayed distribution. Long delays, however, introduce a risk because the large accumulated wealth might fall into the wrong hands. Indeed, as soon as the curvature of a cooperative cluster turns negative, the engulfed defectors can collect the heritage of many generations of cooperators and by doing so start a waning-moon pattern that nullifies the benefits of decelerated invasion. Accidental meeting points of growing cooperative clusters may also act as triggers for the waning-moon effect, thus linking the success of cooperators with their propensity to fail in a rather bizarre way. Our results highlight that "investing in the future" is a good idea only if that future is sufficiently near and not likely to be burdened by inflation.

Effectiveness of conditional punishment for the evolution of public cooperation.

Collective actions, from city marathons to labor strikes, are often mass-driven and subject to the snowball effect. Motivated by this, we study evolutionary advantages of conditional punishment in the spatial public goods game. Unlike unconditional punishers who always impose the same fines on defectors, conditional punishers do so proportionally with the number of other punishers in the group. Phase diagrams in dependence on the punishment fine and cost reveal that the two types of punishers cannot coexist. Spontaneous coarsening of the two strategies leads to an indirect territorial competition with the defectors, which is won by unconditional punishers only if the sanctioning is inexpensive. Otherwise conditional punishers are the victors of the indirect competition, indicating that under more realistic conditions they are indeed the more effective strategy. Both continuous and discontinuous phase transitions as well as tricritical points characterize the complex evolutionary dynamics, which is due to multipoint interactions that are introduced by conditional punishment. We propose indirect territorial competition as a generally applicable mechanism relying on pattern formation, by means of which spatial structure can be utilized by seemingly subordinate strategies to avoid evolutionary extinction.

Risk-driven migration and the collective-risk social dilemma.

A collective-risk social dilemma implies that personal endowments will be lost if contributions to the common pool within a group are too small. Failure to reach the collective target thus has dire consequences for all group members, independently of their strategies. Wanting to move away from unfavorable locations is therefore anything but surprising. Inspired by these observations, we here propose and study a collective-risk social dilemma where players are allowed to move if the collective failure becomes too probable. More precisely, this so-called risk-driven migration is launched depending on the difference between the actual contributions and the declared target. Mobility therefore becomes an inherent property that is utilized in an entirely self-organizing manner. We show that under these assumptions cooperation is promoted much more effectively than under the action of manually determined migration rates. For the latter, we in fact identify parameter regions where the evolution of cooperation is greatly inhibited. Moreover, we find unexpected spatial patterns where cooperators that do not form compact clusters outperform those that do, and where defectors are able to utilize strikingly different ways of invasion. The presented results support the recently revealed importance of percolation for the successful evolution of public cooperation, while at the same time revealing surprisingly simple methods of self-organization towards socially desirable states.

Beyond pairwise strategy updating in the prisoner's dilemma game.

In spatial games players typically alter their strategy by imitating the most successful or one randomly selected neighbor. Since a single neighbor is taken as reference, the information stemming from other neighbors is neglected, which begets the consideration of alternative, possibly more realistic approaches. Here we show that strategy changes inspired not only by the performance of individual neighbors but rather by entire neighborhoods introduce a qualitatively different evolutionary dynamics that is able to support the stable existence of very small cooperative clusters. This leads to phase diagrams that differ significantly from those obtained by means of pairwise strategy updating. In particular, the survivability of cooperators is possible even by high temptations to defect and over a much wider uncertainty range. We support the simulation results by means of pair approximations and analysis of spatial patterns, which jointly highlight the importance of local information for the resolution of social dilemmas.

Adaptive and bounded investment returns promote cooperation in spatial public goods games.

The public goods game is one of the most famous models for studying the evolution of cooperation in sizable groups. The multiplication factor in this game can characterize the investment return from the public good, which may be variable depending on the interactive environment in realistic situations. Instead of using the same universal value, here we consider that the multiplication factor in each group is updated based on the differences between the local and global interactive environments in the spatial public goods game, but meanwhile limited to within a certain range. We find that the adaptive and bounded investment returns can significantly promote cooperation. In particular, full cooperation can be achieved for high feedback strength when appropriate limitation is set for the investment return. Also, we show that the fraction of cooperators in the whole population can become larger if the lower and upper limits of the multiplication factor are increased. Furthermore, in comparison to the traditionally spatial public goods game where the multiplication factor in each group is identical and fixed, we find that cooperation can be better promoted if the multiplication factor is constrained to adjust between one and the group size in our model. Our results highlight the importance of the locally adaptive and bounded investment returns for the emergence and dominance of cooperative behavior in structured populations.