IDEAS home Printed from https://ideas.repec.org/a/eee/gamebe/v66y2009i2p761-774.html
   My bibliography  Save this article

Endogenous games and equilibrium adoption of social norms and ethical constraints

Author

Listed:
  • Conley, John P.
  • Neilson, William

Abstract

We consider a situation in which games are formed endogenously in two senses: (1) there is a pregame in which agents choose to learn a subset of all feasible strategies and can then employ only these strategies in subsequent play, and (2) agents choose their game partners through a costly search process. We show that at any subgame perfect equilibrium, agents will constrain their action sets in the pregame in such a way that a single social norm prevails. Thus, all agents in a society will abide by the same ethical standard, although what standard this will be cannot be predicted. We also show that these are essentially the only SPE outcomes. We suggest that this provides at least a partial explanation for experimental observations that agents apparently choose strategies that do not maximize their payoffs.

Suggested Citation

  • Conley, John P. & Neilson, William, 2009. "Endogenous games and equilibrium adoption of social norms and ethical constraints," Games and Economic Behavior, Elsevier, vol. 66(2), pages 761-774, July.
  • Handle: RePEc:eee:gamebe:v:66:y:2009:i:2:p:761-774
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0899-8256(08)00173-5
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Ingela Alger & Régis Renault, 2007. "Screening Ethics when Honest Agents Keep their Word," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 30(2), pages 291-311, February.
    2. Croson, Rachel & Mnookin, Robert H, 1997. "Does Disputing through Agents Enhance Cooperation? Experimental Evidence," The Journal of Legal Studies, University of Chicago Press, vol. 26(2), pages 331-345, June.
    3. Cole, Harold L. & Mailath, George J. & Postlewaite, Andrew, 2001. "Efficient Non-Contractible Investments in Large Economies," Journal of Economic Theory, Elsevier, vol. 101(2), pages 333-373, December.
    4. Glenn Ellison, 1994. "Cooperation in the Prisoner's Dilemma with Anonymous Random Matching," Review of Economic Studies, Oxford University Press, vol. 61(3), pages 567-588.
    5. Matthew O. Jackson & Simon Wilkie, 2005. "Endogenous Games and Mechanisms: Side Payments Among Players," Review of Economic Studies, Oxford University Press, vol. 72(2), pages 543-566.
    6. Matthew J. Baker & Joyce P. Jacobsen, 2007. "A Human Capital-Based Theory of Postmarital Residence Rules," Journal of Law, Economics, and Organization, Oxford University Press, vol. 23(1), pages 208-241, April.
    7. Ingela Alger & Régis Renault, 2006. "Screening Ethics When Honest Agents Care About Fairness ," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 47(1), pages 59-85, February.
    8. Ray, Debraj & Vohra, Rajiv, 1997. "Equilibrium Binding Agreements," Journal of Economic Theory, Elsevier, vol. 73(1), pages 30-78, March.
    9. Michael Peters & Aloysius Siow, 2002. "Competing Premarital Investments," Journal of Political Economy, University of Chicago Press, vol. 110(3), pages 592-608, June.
    10. repec:cup:apsrev:v:80:y:1986:i:04:p:1095-1111_18 is not listed on IDEAS
    11. Guillermo Caruana & Liran Einav, 2008. "A Theory of Endogenous Commitment," Review of Economic Studies, Oxford University Press, vol. 75(1), pages 99-116.
    12. Jansen, Marcel, 2003. "Can job competition prevent hold-ups?," UC3M Working papers. Economics we035120, Universidad Carlos III de Madrid. Departamento de Economía.
    13. Hirshlifer, David & Rassmusen, Eric, 1989. "Cooperation in a repeated prisoners' dilemma with ostracism," Journal of Economic Behavior & Organization, Elsevier, vol. 12(1), pages 87-106, August.
    14. Dekel, Eddie & Ely, Jeffrey & Yilankaya, Okan, 2004. "Evolution of Preferences," Microeconomics.ca working papers dekel-04-08-13-01-21-07, Vancouver School of Economics, revised 09 Jun 2006.
    15. Pedro Bó, 2007. "Social norms, cooperation and inequality," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 30(1), pages 89-105, January.
    16. Bade, Sophie & Haeringer, Guillaume & Renou, Ludovic, 2009. "Bilateral commitment," Journal of Economic Theory, Elsevier, vol. 144(4), pages 1817-1831, July.
    17. Neilson, William S., 1999. "The economics of favors," Journal of Economic Behavior & Organization, Elsevier, vol. 39(4), pages 387-397, July.
    18. Lang, Kevin & Rosenthal, Robert W, 2001. "Bargaining Piecemeal or All at Once?," Economic Journal, Royal Economic Society, vol. 111(473), pages 526-540, July.
    19. Burdett, Ken & Coles, Melvyn G, 2001. "Transplants and Implants: The Economics of Self-Improvement," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 42(3), pages 597-616, August.
    20. Rubinstein, Ariel & Wolinsky, Asher, 1985. "Equilibrium in a Market with Sequential Bargaining," Econometrica, Econometric Society, vol. 53(5), pages 1133-1150, September.
    21. Eddie Dekel & Jeffrey C. Ely & Okan Yilankaya, 2007. "Evolution of Preferences -super-1," Review of Economic Studies, Oxford University Press, vol. 74(3), pages 685-704.
    22. Michihiro Kandori, 1992. "Social Norms and Community Enforcement," Review of Economic Studies, Oxford University Press, vol. 59(1), pages 63-80.
    23. Lagunoff, Roger, 1992. "Fully Endogenous Mechanism Selection on Finite Outcome Sets," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 2(4), pages 465-480, October.
    24. Chen, Yongmin, 2000. "Promises, Trust, and Contracts," Journal of Law, Economics, and Organization, Oxford University Press, vol. 16(1), pages 209-232, April.
    Full references (including those not matched with items on IDEAS)

    Citations

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


    Cited by:

    1. repec:eee:jeborg:v:141:y:2017:i:c:p:122-134 is not listed on IDEAS
    2. Neilson, William S., 2009. "A theory of kindness, reluctance, and shame for social preferences," Games and Economic Behavior, Elsevier, vol. 66(1), pages 394-403, May.
    3. Stenbacka, Rune & Tombak, Mihkel, 2012. "Make and buy: Balancing bargaining power," Journal of Economic Behavior & Organization, Elsevier, vol. 81(2), pages 391-402.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:gamebe:v:66:y:2009:i:2:p:761-774. 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: (Dana Niculescu). General contact details of provider: http://www.elsevier.com/locate/inca/622836 .

    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 CitEc recognized a reference but did not link an item in RePEc 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.