Advanced Search
MyIDEAS: Login

Evolution of Preferences

Contents:

Author Info

  • Dekel, Eddie
  • Ely, Jeffrey
  • Yilankaya, Okan

Abstract

We model, using evolutionary game theory, the implications of endogenous determination of preferences over the outcomes of any given two-player normal form game, G. We consider a large population randomly and repeatedly matched to play G. Each individual has a preference relation over the outcomes of G which may be different than the "true" payoff function in G, and makes optimal choices given her preferences. The evolution of preferences is driven by the payoffs in G that each player obtains. We define stable outcomes (of G) as arising from the stable points of the evolutionary process described above. In our most general model players know the distribution of preferences in the population and observe their opponents' preferences with probability p. They then play a (Bayesian) Nash equilibrium of the resulting game of incomplete information. In the case in which players can perfectly observe their opponents' preferences, i.e., p=1, (where the game is actually one of complete information) an outcome is stable only if it is efficient. Also, an efficient outcome which arises from a strict Nash equilibrium is stable. We also characterize, for 2×2 games, both the stable outcomes and the stable distributions of preferences in the population. When preferences are unobservable, i.e., p=0, we show that stability in our model of evolution of preferences coincides with the notion of neutrally stable strategy (NSS). Finally, we consider robustness of these results. The necessity and sufficiency results are robust to slight changes in p, except for the sufficiency of NSS when p=0: There are in fact (Pareto-inferior) risk-dominant strict equilibria that are not stable for any p>0.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.econ.ubc.ca/yilankaya/evlprfr.pdf
Our checks indicate that this address may not be valid because: 404 Not Found (http://www.econ.ubc.ca/yilankaya/evlprfr.pdf [301 Moved Permanently]--> http://papers.economics.ubc.ca/legacypapers/evlprfr.pdf). If this is indeed the case, please notify (Maureen Chin)
File Function: Main Text
Download Restriction: no

Bibliographic Info

Paper provided by Vancouver School of Economics in its series Microeconomics.ca working papers with number dekel-04-08-13-01-21-07.

as in new window
Length: 0 pages
Date of creation: 13 Aug 2004
Date of revision: 09 Jun 2006
Handle: RePEc:ubc:pmicro:dekel-04-08-13-01-21-07

Contact details of provider:
Web page: http://www.economics.ubc.ca/

Related research

Keywords: Evolution of preferences; observability;

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:ubc:pmicro:dekel-04-08-13-01-21-07. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Maureen Chin).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.