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A one-shot Prisoners’ Dilemma with procedural utility

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Abstract

This article introduces a model of rationality that combines procedural utility over actions with consequential utility over payoffs. It applies the model to the Prisoners’ Dilemma and shows that empirically observed cooperative behaviors can be rationally explained by a procedural utility for cooperation. The model characterizes the situations in which cooperation emerges as a Nash equilibrium. When rational individuals are not solely concerned by the consequences of their behavior but also care for the process by which these consequences are obtained, there is no one single rational solution to a Prisoners’ Dilemma. Rational behavior depends on the payoffs at stake and on the procedural utility of individuals. In this manner, this model of procedural utility reflects how ethical considerations, social norms or emotions can transform a game of consequences.

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Bibliographic Info

Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 819.

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Date of creation: Jun 2003
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Handle: RePEc:upf:upfgen:819

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Web page: http://www.econ.upf.edu/

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Keywords: Prisoner’s Dilemma; Rationality; Procedural Utility; Social Norms; Ethics; Emotions;

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  1. Robson, Arthur J, 1992. "Status, the Distribution of Wealth, Private and Social Attitudes to Risk," Econometrica, Econometric Society, Econometric Society, vol. 60(4), pages 837-57, July.
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  9. Vogt, Carsten, 2000. "The evolution of cooperation in Prisoners' Dilemma with an endogenous learning mutant," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 42(3), pages 347-373, July.
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  13. Werlang, Sérgio Ribeiro da Costa, 1988. "Common knowledge," Economics Working Papers (Ensaios Economicos da EPGE) 118, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
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  16. Marc Le Menestrel, 2001. "A Process Approach to the Utility for Gambling," Theory and Decision, Springer, Springer, vol. 50(3), pages 249-262, May.
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Cited by:
  1. Marc Le Menestrel & Bertrand Lemaire, 2002. "Additive utility with intransitive indifference and without independence: A homogeneous case," Economics Working Papers, Department of Economics and Business, Universitat Pompeu Fabra 628, Department of Economics and Business, Universitat Pompeu Fabra.

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