  Indirect reciprocity based on reputation is a leading mechanism driving human
cooperation, where monitoring of behaviour and sharing reputation-related
information are crucial. Because collecting information is costly, a tragedy of
the commons can arise, with some individuals free-riding on information
supplied by others. This can be overcome by organising monitors that aggregate
information, supported by fees from their information users. We analyse a
co-evolutionary model of individuals playing a social dilemma game and monitors
watching them; monitors provide information and players vote for a more
beneficial monitor. We find that (1) monitors that simply rate defection badly
cannot stabilise cooperation---they have to overlook defection against
ill-reputed players; (2) such overlooking monitors can stabilise cooperation if
players vote for monitors rather than to change their own strategy; (3) STERN
monitors, who rate cooperation with ill-reputed players badly, stabilise
cooperation more easily than MILD monitors, who do not do so; (4) a STERN
monitor wins if it competes with a MILD monitor; and (5) STERN monitors require
a high level of surveillance and achieve only lower levels of cooperation,
whereas MILD monitors achieve higher levels of cooperation with loose and thus
lower cost monitoring.

Physics and Society