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

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  • Segal, Uzi
  • Sobel, Joel

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.

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Bibliographic Info

Paper provided by Department of Economics, UC San Diego in its series University of California at San Diego, Economics Working Paper Series with number qt9xf8836g.

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Date of creation: 01 Jun 1999
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Handle: RePEc:cdl:ucsdec:qt9xf8836g

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Keywords: games theory;

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References

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  1. Abbink, Klaus & Gary Bolton & Abdolkarim Sadrieh & Fang-Fang Tang, 1996. "Adaptive Learning versus Punishment in Ultimatum Bargaining," Discussion Paper Serie B 381, University of Bonn, Germany.
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