Incorporating fairness motives into the Impulse Balance Equilibrium concept: an application to experimental 2X2 games
AbstractSubstantial evidence has been accumulated in recent empirical works on the limited ability of the Nash equilibrium to rationalize observed behavior in many classes of games played by experimental subjects. This realization has led to several attempts aimed at finding tractable equilibrium concepts which perform better empirically, often by introducing a reference point to which players compare the available payoff allocations, as in impulse balance equilibrium (Selten & Chmura, forthcoming) and in the inequity aversion model (Fehr & Schmidt,1999). The purpose of this paper is to review some features of this recent literature and to propose a new, empirically sound, unifying concept which combines elements of fairness with reference considerations.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 7760.
Date of creation: Oct 2007
Date of revision:
Fairness; Inequity aversion; Aspiration level; Impulse balance; Behavioral economics; Experimental economics; Jacknife estimator;
Find related papers by JEL classification:
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-03-25 (All new papers)
- NEP-CBE-2008-03-25 (Cognitive & Behavioural Economics)
- NEP-EVO-2008-03-25 (Evolutionary Economics)
- NEP-EXP-2008-03-25 (Experimental Economics)
- NEP-GTH-2008-03-25 (Game Theory)
- NEP-UPT-2008-03-25 (Utility Models & Prospect Theory)
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