Effects of individual decision theory assumptions on predictions of cooperation in social dilemmas

Raub and Snijders (1997) show that, under the assumption of S-shaped utility, conditions for cooperation in social dilemmas are more restrictive if outcomes represent losses than if outcomes represent gains. They neglected two interesting issues in their paper: conditions for cooperation in social dilemmas with both losses and gains as outcomes, and the effect of probability weighing on these conditions. In this paper it is shown that, under assumptions of Prospect Theory, conditions for cooperation are best if dilemmas include both positive and negative outcomes, and that these conditions improve with increasing loss aversion. Furthermore, it is shown that probability weighing can effect conditions to cooperate as well.