Optimal distribution of incentives for public cooperation in heterogeneous interaction environments

Abstract: In the framework of evolutionary games with institutional reciprocity, limited incentives are at disposal for rewarding cooperators and punishing defectors. In the simplest case, it can be assumed that, depending on their strategies, all players receive equal incentives from the common pool. The question arises, however, what is the optimal distribution of institutional incentives? How should we best reward and punish individuals for cooperation to thrive? We study this problem for the public goods game on a scale-free network. We show that if the synergetic effects of group interactions are weak, the level of cooperation in the population can be maximized simply by adopting the simplest "equal distribution" scheme. If synergetic effects are strong, however, it is best to reward high-degree nodes more than low-degree nodes. These distribution schemes for institutional rewards are independent of payoff normalization. For institutional punishment, however, the same optimization problem is more complex, and its solution depends on whether absolute or degree-normalized payoffs are used. We find that degree-normalized payoffs require high-degree nodes be punished more lenient than low-degree nodes. Conversely, if absolute payoffs count, then high-degree nodes should be punished stronger than low-degree nodes.