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Incorporating fairness in generalized games of matching pennies

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  • Richard T. Boylan
  • Simon Grant

Abstract

We examine individual behavior in generalized games of matching pennies. We have three main findings. First, individuals cooperate in these games; that is, they systematically select strategies that lead both players to obtain higher expected payoffs than in a Nash equilibrium. Second, existing models that assume altruistic preferences do not explain the cooperative behavior in these games. Third, among the main models in the extant literature, the only one that predicts the observed behavior is the quantal response equilibrium.

Suggested Citation

  • Richard T. Boylan & Simon Grant, 2008. "Incorporating fairness in generalized games of matching pennies," International Journal of Economic Theory, The International Society for Economic Theory, vol. 4(4), pages 445-458, December.
  • Handle: RePEc:bla:ijethy:v:4:y:2008:i:4:p:445-458
    DOI: 10.1111/j.1742-7363.2008.00088.x
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    References listed on IDEAS

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    1. Gary Charness & Matthew Rabin, 2002. "Understanding Social Preferences with Simple Tests," The Quarterly Journal of Economics, Oxford University Press, vol. 117(3), pages 817-869.
    2. Jacob K. Goeree & Charles A. Holt, 2001. "Ten Little Treasures of Game Theory and Ten Intuitive Contradictions," American Economic Review, American Economic Association, vol. 91(5), pages 1402-1422, December.
    3. Ernst Fehr & Klaus M. Schmidt, 1999. "A Theory of Fairness, Competition, and Cooperation," The Quarterly Journal of Economics, Oxford University Press, vol. 114(3), pages 817-868.
    4. McKelvey Richard D. & Palfrey Thomas R., 1995. "Quantal Response Equilibria for Normal Form Games," Games and Economic Behavior, Elsevier, vol. 10(1), pages 6-38, July.
    5. McKelvey, Richard D. & Palfrey, Thomas R. & Weber, Roberto A., 2000. "The effects of payoff magnitude and heterogeneity on behavior in 2 x 2 games with unique mixed strategy equilibria," Journal of Economic Behavior & Organization, Elsevier, vol. 42(4), pages 523-548, August.
    6. Rabin, Matthew, 1993. "Incorporating Fairness into Game Theory and Economics," American Economic Review, American Economic Association, vol. 83(5), pages 1281-1302, December.
    7. Goeree, Jacob K. & Holt, Charles A. & Palfrey, Thomas R., 2003. "Risk averse behavior in generalized matching pennies games," Games and Economic Behavior, Elsevier, vol. 45(1), pages 97-113, October.
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    Cited by:

    1. Jürgen Eichberger & David Kelsey, 2011. "Are the treasures of game theory ambiguous?," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 48(2), pages 313-339, October.

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