http://www.brown.edu/Administration/News_Bureau/2005-06/05-145.html 

As evidenced every day throughout the world, being selfish pays off. When facing off against each other, the cheater will dominate the philanthropist every time. Game theory supports this conclusion. In the typical public goods game, described here: http://en.wikipedia.org/wiki/Public_goods_game . Players each secretly choose to put a certain amount of their private money into a common pool. At the end of the round, the money in the common pool is doubled and evenly distributed back amongst the players. In this scenario, when the philanthropist faces off against a cheater / selfish player, the selfish player will always come out on top. Being selfish is always the winning strategy. Players can’t afford to be altruists due to the risk of selfishness from others.

Because of this, it has been very difficult for scientists to explain how cooperation has evolved both in human and animal societies, when selfishness seems to  pay off. This phenomena has been dubbed “The Tragedy of Commons”. Three researchers have now come up with a new model for the public goods game that has helped to shed some light on why cooperation is an effective and even dominant strategy. The details of their experiement can be seen in the link at the top of this post. In summary, players were broken off into groups to play the game. Each player then reproduced according to the amount of payoff they had received, and passed their strategy on to their offspring. These players then split up into new groups and repeated the process. After running the game many times, the researchers found that cooperators thrived. This new model, created by three researchers Timothy Killingback, Thomas Flatt, and Jonas Bier, helps to show how cooperation can evolve and thrive, using only population dynamics as an explanation. One of their conclusions was that cooperation appeared to thrive in smaller groups, where their investments payed off, allowing them to dominate the small group and then spread their offspring and through them, their altruism to other groups.

The researchers’ full paper can be found in the June 22, 2006, issue of Proceedings of the Royal Society B: BiologicalSciences. A summary of their work can be found in the link at the top of this post.