Revisiting institutional punishment in the $N$-person prisoner's dilemma

Abstract: The conflict between individual and collective interests makes fostering cooperation in human societies a challenging task, requiring drastic measures such as the establishment of sanctioning institutions. These institutions are costly because they have to be maintained regardless of the presence or absence of offenders. Here we revisit some improvements to the standard $N$-person prisoner's dilemma formulation with institutional punishment in a well-mixed population, namely the elimination of overpunishment, the requirement of a minimum number of contributors to establish the sanctioning institution, and the sharing of its maintenance costs once this minimum number is reached. In addition, we focus on large groups or communities for which sanctioning institutions are ubiquitous. Using the replicator equation framework for an infinite population, we find that by sufficiently fining players who fail to contribute either to the public good or to the sanctioning institution, a population of contributors immune to invasion by these free riders can be established, provided that the contributors are sufficiently numerous. In a finite population, we use finite-size scaling to show that, for some parameter settings, demographic noise helps to fixate the strategy that contributes to the public good but not to the sanctioning institution even for infinitely large populations when, somewhat counterintuitively, its proportion in the initial population vanishes with a small power of the population size.