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Equilibrium Vengeance

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  • Daniel Friedman
  • Nirvikar Singh

Abstract

This paper introduces two ideas, emotional state dependent utility components (ESDUCs), and evolutionary perfect Bayesian equilibrium (EPBE). Using a simple extensive form game, we illustrate the efficiency-enhancing role of a powerful ESDUC, the vengeance motive. Incorporating behavioral noise and observational noise leads to a range of (short run) Perfect Bayesian equilibria (PBE) involving both vengeful and non-vengeful types. We then derive two (long run) EPBE, one where both types survive and reap mutual gains, and a second where only the non-vengeful type survives and there are no mutual gains.

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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 766.

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Date of creation: 2002
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Handle: RePEc:ces:ceswps:_766

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Keywords: negative reciprocity; perfect Bayesian equilibrium; evolutionary perfect Bayesian equilibrium; emotional state dependent utility;

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References

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Citations

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Cited by:
  1. 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.
  2. Arce, Daniel G., 2013. "Principals’ preferences for agents with social preferences," Journal of Economic Behavior & Organization, Elsevier, vol. 90(C), pages 154-163.
  3. Guttman, Joel M., 2013. "On the evolution of conditional cooperation," European Journal of Political Economy, Elsevier, vol. 30(C), pages 15-34.
  4. Jan Heufer, 2009. "In Vino Veritas: The Economics of Drinking," Ruhr Economic Papers 0158, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  5. Friedman, Daniel & Singh, Nirvikar, 2003. "Negative Reciprocity: The Coevolution of Memes and Genes," Santa Cruz Department of Economics, Working Paper Series qt8n49r3t2, Department of Economics, UC Santa Cruz.

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