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Satisficing Leads to Cooperation in Mutual Interests Games

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  • Amit Pazgal
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    Abstract

    We study the play of mutual interests games by satisficing decision makers. We show that, for a high enough inital aspiration level, and under certain assumptions of "tremble," there is a high probability (close to unity) of convergence to the Pareto dominant cooperative outcome. Simulations indicate that the theoretical result is robust with respect to the "trembling" mechanism.

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    File URL: http://www.kellogg.northwestern.edu/research/math/papers/1126.pdf
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    Bibliographic Info

    Paper provided by Northwestern University, Center for Mathematical Studies in Economics and Management Science in its series Discussion Papers with number 1126.

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    Date of creation: May 1995
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    Handle: RePEc:nwu:cmsems:1126

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    Postal: Center for Mathematical Studies in Economics and Management Science, Northwestern University, 580 Jacobs Center, 2001 Sheridan Road, Evanston, IL 60208-2014
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    Web page: http://www.kellogg.northwestern.edu/research/math/
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    1. Aderlini, L. & Ianni, A., 1993. "Path Dependence and Learning from Neighbours," Papers 186, Cambridge - Risk, Information & Quantity Signals.
    2. Itzhak Gilboa & David Schmeidler, 1992. "Case-Based Decision Theory," Discussion Papers 994, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    3. Neyman, Abraham, 1985. "Bounded complexity justifies cooperation in the finitely repeated prisoners' dilemma," Economics Letters, Elsevier, vol. 19(3), pages 227-229.
    4. Bendor, J. & Mookherjee, D. & Ray, D., 1994. "Aspirations, Adaptive Learning and Cooperation in Reapeted Games," Papers 27, Boston University - Department of Economics.
    5. Anderlini, Luca & Sabourian, Hamid, 1995. "Cooperation and Effective Computability," Econometrica, Econometric Society, vol. 63(6), pages 1337-69, November.
    6. Kandori, M. & Mailath, G.J., 1991. "Learning, Mutation, And Long Run Equilibria In Games," Papers 71, Princeton, Woodrow Wilson School - John M. Olin Program.
    7. Osborne, Martin J., 1990. "Signaling, forward induction, and stability in finitely repeated games," Journal of Economic Theory, Elsevier, vol. 50(1), pages 22-36, February.
    8. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
    9. Matsui, Akihiko, 1991. "Cheap-talk and cooperation in a society," Journal of Economic Theory, Elsevier, vol. 54(2), pages 245-258, August.
    10. Gilboa, Itzhak & Schmeidler, David, 1996. "Case-Based Optimization," Games and Economic Behavior, Elsevier, vol. 15(1), pages 1-26, July.
    11. Binmore, Kenneth G. & Samuelson, Larry, 1992. "Evolutionary stability in repeated games played by finite automata," Journal of Economic Theory, Elsevier, vol. 57(2), pages 278-305, August.
    12. Abreu, Dilip & Rubinstein, Ariel, 1988. "The Structure of Nash Equilibrium in Repeated Games with Finite Automata," Econometrica, Econometric Society, vol. 56(6), pages 1259-81, November.
    13. Akihiko Matsui, 1989. "Cheap Talk and Cooperation in the Society," Discussion Papers 848, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    14. Ariel Rubinstein, 1997. "Finite automata play the repeated prisioners dilemma," Levine's Working Paper Archive 1639, David K. Levine.
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