Evolutionary Stability in a Reputational Model of Bargaining
AbstractA large and growing literature on reputation in games builds on the insight that the possibility of one or more players being other than fully rational can have significant effects on equilibrium behavior. This literature leaves unexplained the presence of behavioral players in the first place, and the particular forms of irrationality assumed. In this paper we endogenize departures from rationality on the basis of an evolutionary stability criterion, under the assumption that rational players incur a cost which reflects the greater sophistication of their behavior. This cost may be arbitrarily small. Within the context of a reputational model of bargaining, we show that evolutionary stability necessitates the presence of behavioral players, and places significant restrictions on the set of behavioral types that can coexist. It is consistent, however, with a broad variety of outcomes ranging from immediate agreement to complete surplus dissipation. The long run population share of behavioral types is greatest at states in which surplus dissipation is either negligible or almost complete.
Download InfoIf 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.
Bibliographic InfoPaper provided by EconWPA in its series Game Theory and Information with number 0103001.
Length: 29 pages
Date of creation: 28 Mar 2001
Date of revision:
Note: Type of Document - Tex; prepared on IBM PC ; to print on HP/PostScript; pages: 29 ; figures: included
Contact details of provider:
Web page: http://18.104.22.168
Reputation; Evolutionary Stability; Bargaining;
Other versions of this item:
- Abreu, Dilip & Sethi, Rajiv, 2003. "Evolutionary stability in a reputational model of bargaining," Games and Economic Behavior, Elsevier, vol. 44(2), pages 195-216, August.
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Stahl Dale O., 1993.
"Evolution of Smartn Players,"
Games and Economic Behavior,
Elsevier, vol. 5(4), pages 604-617, October.
- Young H. P., 1993. "An Evolutionary Model of Bargaining," Journal of Economic Theory, Elsevier, vol. 59(1), pages 145-168, February.
- Dilip Abreu & Faruk Gul, 2000.
"Bargaining and Reputation,"
Econometric Society, vol. 68(1), pages 85-118, January.
- Guttman, Joel M., 1996. "Rational actors, tit-for-tat types, and the evolution of cooperation," Journal of Economic Behavior & Organization, Elsevier, vol. 29(1), pages 27-56, January.
- Kreps, David M. & Wilson, Robert, 1982.
"Reputation and imperfect information,"
Journal of Economic Theory,
Elsevier, vol. 27(2), pages 253-279, August.
- David Kreps & Paul Milgrom & John Roberts & Bob Wilson, 2010.
"Rational Cooperation in the Finitely Repeated Prisoners' Dilemma,"
Levine's Working Paper Archive
239, David K. Levine.
- Kreps, David M. & Milgrom, Paul & Roberts, John & Wilson, Robert, 1982. "Rational cooperation in the finitely repeated prisoners' dilemma," Journal of Economic Theory, Elsevier, vol. 27(2), pages 245-252, August.
- Dekel, Eddie & Scotchmer, Suzanne, 1992.
"On the evolution of optimizing behavior,"
Journal of Economic Theory,
Elsevier, vol. 57(2), pages 392-406, August.
- Conlisk, John, 1980. "Costly optimizers versus cheap imitators," Journal of Economic Behavior & Organization, Elsevier, vol. 1(3), pages 275-293, September.
- McKelvey, Richard D & Palfrey, Thomas R, 1992. "An Experimental Study of the Centipede Game," Econometrica, Econometric Society, vol. 60(4), pages 803-36, July.
- Paul Milgrom & John Roberts, 1980.
"Predation, Reputation, and Entry Deterrence,"
427, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Simon, Herbert A, 1978. "Rationality as Process and as Product of Thought," American Economic Review, American Economic Association, vol. 68(2), pages 1-16, May.
- Karl H. Schlag & Dieter Balkenborg, 2001. "Evolutionarily stable sets," International Journal of Game Theory, Springer, vol. 29(4), pages 571-595.
- Thierry Vignolo, 2010.
"Imitation and selective matching in reputational games,"
Journal of Evolutionary Economics,
Springer, vol. 20(3), pages 395-412, June.
- Thierry Vignolo, 2007. "Imitation and Selective Matching in Reputational Games," Economics Working Papers ECO2007/31, European University Institute.
- Crawford, Vincent P., 2001.
"Lying for Strategic Advantage: Rational and Boundedly Rational Misrepresentation of Intentions,"
University of California at San Diego, Economics Working Paper Series
qt6k65014s, Department of Economics, UC San Diego.
- Vincent P. Crawford, 2003. "Lying for Strategic Advantage: Rational and Boundedly Rational Misrepresentation of Intentions," American Economic Review, American Economic Association, vol. 93(1), pages 133-149, March.
- Kai A. Konrad & Florian Morath, 2011.
"Evolutionarily stable in-group favoritism and out-group spite in intergroup conflict,"
evolutionarily_stable, Max Planck Institute for Tax Law and Public Finance.
- Konrad, Kai A. & Morath, Florian, 2012. "Evolutionarily stable in-group favoritism and out-group spite in intergroup conflict," Munich Reprints in Economics 13963, University of Munich, Department of Economics.
- Jack Robles, 2008. "Evolution, bargaining, and time preferences," Economic Theory, Springer, vol. 35(1), pages 19-36, April.
- Friedman, Daniel & Singh, Nirvikar, 2009.
Games and Economic Behavior,
Elsevier, vol. 66(2), pages 813-829, July.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (EconWPA).
If references are entirely missing, you can add them using this form.