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Co-evolution of Preferences and Information in Simple Games of Trust

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  • Werner Güth
  • Hartmut Kliemt
  • Bezalel Peleg

Abstract

In standard rational choice modelling decisions are made according to given information and preferences. In the model presented here the `information technology' of individual decision-makers as well as their preferences evolve in a dynamic process. In this process decisions are made rationally by players who differ in their informational as well as in their preference type. Relative success of alternative decisions feeds back on the type composition of the population which in turn influences rational decision-making. An indirect evolutionary analysis of an elementary yet important basic game of trust shows that under certain parameter constellations the population dynamics of the evolutionary process specify a unique completely mixed rest point. However, as opposed to previous studies of preference formation in the game of trust there is no convergence to but only circumventing the rest point if the informational status of individuals evolves rather than being chosen strategically. Copyright Verein fü Socialpolitik and Blackwell Publishers Ltd 2000.

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Bibliographic Info

Article provided by Verein für Socialpolitik in its journal German Economic Review.

Volume (Year): 1 (2000)
Issue (Month): 1 (02)
Pages: 83-110

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Handle: RePEc:bla:germec:v:1:y:2000:i:1:p:83-110

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References

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  1. Brennan, G. & Güth, W. & Kliemt, H., 1997. "Trust in the Shadow of the Courts," Discussion Paper 1997-89, Tilburg University, Center for Economic Research.
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Citations

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Cited by:
  1. Fali Huang, 2007. "Building Social Trust : A Human Capital Approach," Labor Economics Working Papers 22447, East Asian Bureau of Economic Research.
  2. Thomas Gehrig & Werner Güth & René Levínský, 2013. "On insider trading and belief evolution," Journal of Evolutionary Economics, Springer, vol. 23(4), pages 767-781, September.
  3. Daniel Friedman & Nirvikar Singh, 2002. "Equilibrium Vengeance," CESifo Working Paper Series 766, CESifo Group Munich.
  4. Guttman, Joel M., 2013. "On the evolution of conditional cooperation," European Journal of Political Economy, Elsevier, vol. 30(C), pages 15-34.
  5. Friedman, Daniel & Singh, Nirvikar, 2004. "Vengefulness Evolves in Small Groups," Santa Cruz Department of Economics, Working Paper Series qt0xp29105, Department of Economics, UC Santa Cruz.
  6. Steffen Huck & Georg Kirchsteiger & Jörg Oechssler, 2005. "Learning to like what you have - explaining the endowment effect," Economic Journal, Royal Economic Society, vol. 115(505), pages 689-702, 07.
  7. Pierre Courtois & Tarik Tazdaït, 2011. "Learning to trust strangers: an evolutionary perspective," Working Papers 11-06, LAMETA, Universtiy of Montpellier, revised Feb 2011.
  8. Guth, Werner & Kliemt, Hartmut, 2004. "Evolutionary parallelism versus co-evolution: a comment on Joseph Henrich," Journal of Economic Behavior & Organization, Elsevier, vol. 53(1), pages 75-79, January.
  9. Anders Poulsen & Gert Svendsen, 2005. "Social Capital and Endogenous Preferences," Public Choice, Springer, vol. 123(1), pages 171-196, April.
  10. Bolle, Friedel & Kaehler, Jessica, 2007. "Experimenters' choices of trust experiments and their consequence for meta-studies," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 36(6), pages 865-874, December.
  11. Alex Possajennikov, 2004. "Two-Speed Evolution of Strategies and Preferences In Symmetric Games," Theory and Decision, Springer, vol. 57(3), pages 227-263, November.
  12. Werner Güth & Hartmut Kliemt & Georg v. Wangenheim, 2006. "Verstehen, Verständigung, Vertrag - Ökonomik als Geistes-, Natur- und Staatswissenschaft," Papers on Strategic Interaction 2006-12, Max Planck Institute of Economics, Strategic Interaction Group.
  13. Stahl, Dale O. & Haruvy, Ernan, 2008. "Level-n bounded rationality in two-player two-stage games," Journal of Economic Behavior & Organization, Elsevier, vol. 65(1), pages 41-61, January.
  14. Ernan Haruvy & Dale Stahl, 2004. "Level-n Bounded Rationality on a Level Playing Field of Sequential Games," Econometric Society 2004 North American Winter Meetings 126, Econometric Society.

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