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Tit for Tat: Foundations of Preferences for Reciprocity in Strategic Settings

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Author Info
Uzi Segal
Joel Sobel

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Abstract

This paper assumes that in addition to the conventional (selfish) preferences over outcomes, players in a strategic environment have preferences over strategies. In the context of two-player games, it provides conditions under which a player's preferences over strategies can be represented as a weighted average of the individual's selfish payoffs and the selfish payoffs of the opponent. The weight one player places on the opponent's selfish utility depends on the opponent's behavior. In this way, the framework is rich enough to describe the behavior of individuals who repay kindness with kindness and meanness with meanness. The paper assumes that each player has an ordering over his opponent's strategies that describes the niceness of these strategies. It introduces a condition that insures that the weight on opponent's utility increases if and only if the opponent chooses a nicer strategy.

* University of Western Ontario

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Paper provided by Department of Economics, UC San Diego in its series University of California at San Diego, Economics Working Paper Series with number 99-10.

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Date of creation: Jun 1999
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Handle: RePEc:cdl:ucsdec:99-10

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. repec:att:wimass:199726 is not listed on IDEAS
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  10. Ernst Fehr & Simon Gachter & Georg Kirchsteiger, 1997. "Reciprocity as a Contract Enforcement Device: Experimental Evidence," Econometrica, Econometric Society, vol. 65(4), pages 833-860, July.
  11. Bolton Gary E. & Zwick Rami, 1995. "Anonymity versus Punishment in Ultimatum Bargaining," Games and Economic Behavior, Elsevier, vol. 10(1), pages 95-121, July. [Downloadable!] (restricted)
  12. Abbink, Klaus, Gary Bolton, Abdolkarim Sadrieh, and Fang-Fang Tang, 1996. "Adaptive Learning versus Punishment in Ultimatum Bargaining," Discussion Paper Serie B 381, University of Bonn, Germany.
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  13. Prasnikar, Vesna & Roth, Alvin E, 1992. "Considerations of Fairness and Strategy: Experimental Data from Sequential Games," The Quarterly Journal of Economics, MIT Press, vol. 107(3), pages 865-88, August. [Downloadable!] (restricted)
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  15. Glenn W. Harrison & Jack Hirshleifer, 1988. "An Experimental Evaluation of Weakest-Link/Best Shot Models of Public Goods," UCLA Economics Working Papers 473, UCLA Department of Economics. [Downloadable!]
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  16. Gerard Debreu, 1959. "Topological Methods in Cardinal Utility Theory," Cowles Foundation Discussion Papers 76, Cowles Foundation, Yale University. [Downloadable!]
  17. Bolton, Gary E, 1991. "A Comparative Model of Bargaining: Theory and Evidence," American Economic Review, American Economic Association, vol. 81(5), pages 1096-136, December. [Downloadable!] (restricted)
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  19. Ochs, Jack & Roth, Alvin E, 1989. "An Experimental Study of Sequential Bargaining," American Economic Review, American Economic Association, vol. 79(3), pages 355-84, June. [Downloadable!] (restricted)
  20. Jacobsen, Eva, and Abdolkarim Sadrieh, 1996. "Experimental Proof for the Motivational Importance of Reciprocity," Discussion Paper Serie B 386, University of Bonn, Germany.
  21. Gary E. Bolton & Axel Ockenfels, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March. [Downloadable!] (restricted)
  22. Guth, Werner, 1995. "On ultimatum bargaining experiments -- A personal review," Journal of Economic Behavior & Organization, Elsevier, vol. 27(3), pages 329-344, August. [Downloadable!] (restricted)
  23. Segal, Uzi, 1992. "Additively separable representations on non-convex sets," Journal of Economic Theory, Elsevier, vol. 56(1), pages 89-99, February. [Downloadable!] (restricted)
  24. Berg Joyce & Dickhaut John & McCabe Kevin, 1995. "Trust, Reciprocity, and Social History," Games and Economic Behavior, Elsevier, vol. 10(1), pages 122-142, July. [Downloadable!] (restricted)
  25. Camerer, Colin F, 1997. "Progress in Behavioral Game Theory," Journal of Economic Perspectives, American Economic Association, vol. 11(4), pages 167-88, Fall. [Downloadable!] (restricted)
  26. Geanakoplos, John & Pearce, David & Stacchetti, Ennio, 1989. "Psychological games and sequential rationality," Games and Economic Behavior, Elsevier, vol. 1(1), pages 60-79, March. [Downloadable!] (restricted)
  27. Segal, Uzi, 1990. "Two-Stage Lotteries without the Reduction Axiom," Econometrica, Econometric Society, vol. 58(2), pages 349-77, March. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. J. Atsu Amegashie, 2006. "A psychological game with interdependent preference types," Levine's Bibliography 321307000000000511, UCLA Department of Economics. [Downloadable!]
    Other versions:
  2. Sebastian Kranz, 2006. "Moral Norms in a Partly Compliant Society," Levine's Bibliography 321307000000000092, UCLA Department of Economics. [Downloadable!]
    Other versions:
  3. Faruk Gul & Wolfgang Pesendorfer, 2006. "The Canonical Type Space for Interdependent Preferences," Levine's Bibliography 321307000000000457, UCLA Department of Economics. [Downloadable!]
    Other versions:
  4. Ernst Fehr, 2003. "Psychological Foundations of Incentives," Microeconomics 0305010, EconWPA. [Downloadable!]
    Other versions:
  5. Charness, Gary & Dufwenberg, Martin, 2003. "Promises & Partnership," Research Papers in Economics 2003:3, Stockholm University, Department of Economics. [Downloadable!]
  6. Conchita D’Ambrosio & Joachim R. Frick, 2007. "Individual Well-Being in a Dynamic Perspective," IZA Discussion Papers 2618, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  7. Rachel Croson & Enrique Fatas & Tibor Neugebauer, 2006. "An Experimental Analysis Of Conditional Cooperation," Working Papers. Serie AD 2006-24, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie). [Downloadable!]
  8. Wolfgang Pesendorfer & Faruk Gul, 2007. "The Canonical Space for Behavioral Types," Levine's Bibliography 843644000000000345, UCLA Department of Economics. [Downloadable!]
  9. Pierpaolo Battigalli & Martin Dufwenberg, . "Dynamic Psychological Games," Working Papers 287, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University. [Downloadable!]
    Other versions:
  10. Ernst Fehr & Urs Fischbacher, . "Why Social Preferences Matter - The Impact of Non-Selfish Motives on Competition," IEW - Working Papers iewwp084, Institute for Empirical Research in Economics - IEW. [Downloadable!]
  11. Fabio Maccheroni & Massimo Marinacci & Aldo Rustichini, 2008. "Social Decision Theory: Choosing within and between Groups," Carlo Alberto Notebooks 71, Collegio Carlo Alberto. [Downloadable!]
  12. Santos-Pinto, Luís, 2006. "Reciprocity, inequity-aversion, and oligopolistic competition," MPRA Paper 3143, University Library of Munich, Germany, revised 14 Apr 2007. [Downloadable!]
  13. Amegashie, J.A., 2006. "Guilt Aversion and Insincerity-Induced Disutility," Working Papers 2006-11, University of Guelph, Department of Economics. [Downloadable!]
  14. Fehr, Ernst & Schmidt, Klaus M., 2001. "Theories of Fairness and Reciprocity," Discussion Papers in Economics 14, University of Munich, Department of Economics. [Downloadable!]
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  15. Riedl, A. & Vyrastekova, J., 2002. "Social preference in three-player ultimatum game experiments," Discussion Paper 5, Tilburg University, Center for Economic Research. [Downloadable!]
  16. Gary Charness & Martin Dufwenberg, 2004. "Promises and Partnership," Levine's Bibliography 122247000000000001, UCLA Department of Economics. [Downloadable!]
    Other versions:
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