Cooperation and Learning Dynamics under Risk Diversity and Financial Incentives

In this paper, we investigate the role of risk diversity in groups of agents learning to play collective risk dilemmas (CRDs). We show that risk diversity poses new challenges to cooperation that are not observed in homogeneous groups. While increasing average risk contributes, in general, for agents to cooperate with higher probability, increasing risk diversity significantly reduces a population's ability to achieve a collective target. Risk diversity leads to asymmetrical changes in agents policies-i.e. the increase in contributions from individuals at high risk is unable to compensate for the decrease in contributions from individuals at low risk-which reduces the total contributions in a population and overall social welfare. At the same time, risk diversity offers novel opportunities to design financial incentives, which, as we show, can improve cooperation, target achievement and global welfare beyond the levels obtained in the absence of diversity. Our results highlight the need to align risk perceptions among agents and implement diversity-based incentive policies in order to improve collectives' abilities to avoid future catastrophic events.