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Equilibrium Vengeance

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  • Friedman, Daniel
  • Singh, Nirvikar

Abstract

The efficiency-enhancing role of the vengeance motive is illustrated in a simple social dilemma game in extensive form. Incorporating behavioral noise and observational noise in random interactions in large groups leads to seven continuous families of (short run) Perfect Bayesian equilibria (PBE) that involve both vengeful and non-vengeful types. A new long run evolutionary equilibrium concept, Evolutionary Perfect Bayesian Equilibrium (EPBE), shrinks the equilibrium set to two points. In one EPBE, only the non-vengeful type survives and there are no mutual gains. In the other EPBE, both types survive and reap mutual gains.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 4321.

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Date of creation: Jun 2007
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Handle: RePEc:pra:mprapa:4321

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Keywords: reciprocity; vengeance; evolutionary perfect Bayesian equilibrium; social dilemmas;

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Citations

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Cited by:
  1. Arce, Daniel G., 2013. "Principals’ preferences for agents with social preferences," Journal of Economic Behavior & Organization, Elsevier, vol. 90(C), pages 154-163.
  2. Guttman, Joel M., 2013. "On the evolution of conditional cooperation," European Journal of Political Economy, Elsevier, vol. 30(C), pages 15-34.
  3. 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.
  4. 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.
  5. 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.

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