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Co-evolution of Preferences and Information in Simple Games of Trust

Author

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  • Güth Werner

    (Humboldt University, Berlin, Germany)

  • Kliemt Hartmut

    (Gerhard-Mercator University, GH, Duisburg, Germany)

  • Peleg Bezalel

    (Hebrew University of Jerusalem and Copenhagen Business School, CopenhagenDenmark)

Abstract

In standard rational choice modelling decisions are made according to given information and preferences. In the model presented here the ‘information technology’ of individual decision-makers as well as their preferences evolve in a dynamic process. In this process decisions are made rationally by players who differ in their informational as well as in their preference type. Relative success of alternative decisions feeds back on the type composition of the population which in turn influences rational decision-making. An indirect evolutionary analysis of an elementary yet important basic game of trust shows that under certain parameter constellations the population dynamics of the evolutionary process specify a unique completely mixed rest point. However, as opposed to previous studies of preference formation in the game of trust there is no convergence to but only circumventing the rest point if the informational status of individuals evolves rather than being chosen strategically.

Suggested Citation

  • Güth Werner & Kliemt Hartmut & Peleg Bezalel, 2000. "Co-evolution of Preferences and Information in Simple Games of Trust," German Economic Review, De Gruyter, vol. 1(1), pages 83-110, February.
    • Handle: RePEc:bpj:germec:v:1:y:2000:i:1:p:83-110
    DOI: 10.1111/1468-0475.00006
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    Cited by:

    1. Elsenbroich, Corinna & Payette, Nicolas, 2020. "Choosing to cooperate: Modelling public goods games with team reasoning," Journal of choice modelling, Elsevier, vol. 34(C).
    2. Friedman, Daniel & Singh, Nirvikar, 2009. "Equilibrium vengeance," Games and Economic Behavior, Elsevier, vol. 66(2), pages 813-829, July.
    3. Anders Poulsen & Gert Svendsen, 2005. "Social Capital and Endogenous Preferences," Public Choice, Springer, vol. 123(1), pages 171-196, April.
    4. Guth, Werner & Kliemt, Hartmut, 2004. "Evolutionary parallelism versus co-evolution: a comment on Joseph Henrich," Journal of Economic Behavior & Organization, Elsevier, vol. 53(1), pages 75-79, January.
    5. Guttman, Joel M., 2013. "On the evolution of conditional cooperation," European Journal of Political Economy, Elsevier, vol. 30(C), pages 15-34.
    6. Pierre Courtois & Tarik Tazdaït, 2012. "Learning to trust strangers: an evolutionary perspective," Journal of Evolutionary Economics, Springer, vol. 22(2), pages 367-383, April.
    7. Fali Huang, 2007. "Building Social Trust: A Human-Capital Approach," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 163(4), pages 552-573, December.
    8. Ernan Haruvy & Dale Stahl, 2004. "Level-n Bounded Rationality on a Level Playing Field of Sequential Games," Econometric Society 2004 North American Winter Meetings 126, Econometric Society.
    9. Alex Possajennikov, 2004. "Two-Speed Evolution of Strategies and Preferences In Symmetric Games," Theory and Decision, Springer, vol. 57(3), pages 227-263, November.
    10. Marie-Laure Cabon-Dhersin & Shyama Ramani, 2005. "Does trust matter for R&D cooperation? A game theoretic examination," Theory and Decision, Springer, vol. 57(2), pages 143-180, March.
    11. Bolle, Friedel & Kaehler, Jessica, 2007. "Experimenters' choices of trust experiments and their consequence for meta-studies," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 36(6), pages 865-874, December.
    12. Thomas Gehrig & Werner Güth & René Levínský, 2013. "On insider trading and belief evolution," Journal of Evolutionary Economics, Springer, vol. 23(4), pages 767-781, September.
    13. Daniel Friedman & Nirvikar Singh, 2004. "Vengefulness Evolves in Small Groups," Palgrave Macmillan Books, in: Steffen Huck (ed.), Advances in Understanding Strategic Behaviour, chapter 3, pages 28-54, Palgrave Macmillan.
    14. T.K. Ahn & Justin Esarey, 2008. "A Dynamic Model of Generalized Social Trust," Journal of Theoretical Politics, , vol. 20(2), pages 151-180, April.
    15. Alejandro Caparrós & Jean-Christophe Péreau & Tarik Tazdaït, 2010. "Mutual Aid," Rationality and Society, , vol. 22(1), pages 103-128, February.
    16. Stahl, Dale O. & Haruvy, Ernan, 2008. "Level-n bounded rationality in two-player two-stage games," Journal of Economic Behavior & Organization, Elsevier, vol. 65(1), pages 41-61, January.
    17. Vogt, Carsten, 2000. "The evolution of cooperation in Prisoners' Dilemma with an endogenous learning mutant," Journal of Economic Behavior & Organization, Elsevier, vol. 42(3), pages 347-373, July.
    18. Werner Güth & Hartmut Kliemt & Georg v. Wangenheim, 2006. "Verstehen, Verständigung, Vertrag - Ökonomik als Geistes-, Natur- und Staatswissenschaft," Papers on Strategic Interaction 2006-12, Max Planck Institute of Economics, Strategic Interaction Group.

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    More about this item

    JEL classification:

    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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