Commitment and weakness of will in game theory and neoclassical economics
This paper draws on theoretical and experimental studies in game theory and on the neoclassical concept of intertemporal inconsistency in choice to argue that the motivational theory shared by neoclassical economics and noncooperative game theory is mistaken in assuming that commitment never takes place in human decisions. The paper first gives two parallel examples, one of intertemporal inconsistency in a financial decision, and the other of noncooperative (subgame perfect) equilibrium in a game in extensive form. So far as one decision-maker is concerned, the two decisions are isomorphic, and both can be associated with weakness of will. By contrast, the cooperative analysis of the game (along the lines originally suggested by von Neumann and Morgenstern) predicts a different decision associated with commitment to a particular conditional sequence of "behavior strategies", i.e. a particular pure strategy. In effect the cooperative analysis assumes perfect strength of will. The paper then argues that strength of will and rationality of decisions are independent dimensions of a decision process and reviews some experimental evidence that suggests that both traditions are mistaken in their extreme assumptions about commitment or strength of will: neoclassical economics and noncooperative game theory in assuming that commitment never takes place, and cooperative game theory in assuming that it always does. The evidence indicates moreover that commitment is more likely in at least one context of value judgments than in its absence. The value context is reciprocity. It is suggested that a focus of research on the circumstances that favor commitment - rather than on modifications of an assumed utility function to accommodate non-self-regarding motivations - might lead to a more fruitful behavioral economics and behavioral game theory.
Volume (Year): 38 (2009)
Issue (Month): 4 (August)
|Contact details of provider:|| Web page: http://www.elsevier.com/locate/inca/620175|
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.:
- Hoffman, Elizabeth & McCabe, Kevin A & Smith, Vernon L, 1998. "Behavioral Foundations of Reciprocity: Experimental Economics and Evolutionary Psychology," Economic Inquiry, Western Economic Association International, vol. 36(3), pages 335-352, July.
- James Andreoni & Emily Blanchard, 2006.
"Testing subgame perfection apart from fairness in ultimatum games,"
Springer;Economic Science Association, vol. 9(4), pages 307-321, December.
- Andreoni,J. & Blanchard,E., 2002. "Testing subgame perfection apart from fairness in ultimatum games," Working papers 15, Wisconsin Madison - Social Systems.
- A. Meltzer & Peter Ordeshook & Thomas Romer, 1982. "Introduction," Public Choice, Springer, vol. 39(1), pages 1-3, January.
- Roth, Alvin E. & Vesna Prasnikar & Masahiro Okuno-Fujiwara & Shmuel Zamir, 1991. "Bargaining and Market Behavior in Jerusalem, Ljubljana, Pittsburgh, and Tokyo: An Experimental Study," American Economic Review, American Economic Association, vol. 81(5), pages 1068-1095, December.
- Alvin E. Roth & V. Prasnikar & M. Okuno-Fujiwara & S. Zamir, 1998. "Bargaining and market behavior in Jerusalem, Liubljana, Pittsburgh and Tokyo: an experimental study," Levine's Working Paper Archive 344, David K. Levine.
- Nash, John, 1953. "Two-Person Cooperative Games," Econometrica, Econometric Society, vol. 21(1), pages 128-140, April.
- Hessel Oosterbeek & Randolph Sloof & Gijs van de Kuilen, 2004. "Cultural Differences in Ultimatum Game Experiments: Evidence from a Meta-Analysis," Experimental Economics, Springer;Economic Science Association, vol. 7(2), pages 171-188, June.
- Hessel Oosterbeek & Randolph Sloof & Gijs van de Kuilen, 2004. "Cultural differences in ultimatum game experiments: Evidence from a meta-analysis," Experimental 0401003, EconWPA.
- Cooper, Russell, et al, 1990. "Selection Criteria in Coordination Games: Some Experimental Results," American Economic Review, American Economic Association, vol. 80(1), pages 218-233, March.
- W. Guth & R. Schmittberger & B. Schwartz, 2010. "An experimental analysis of ultimatum bargaining," Levine's Working Paper Archive 291, David K. Levine.
- Guth, Werner & Schmittberger, Rolf & Schwarze, Bernd, 1982. "An experimental analysis of ultimatum bargaining," Journal of Economic Behavior & Organization, Elsevier, vol. 3(4), pages 367-388, December.
- Stanley, T. D. & Tran, Ume, 1998. "Economics students need not be greedy: Fairness and the ultimatum game," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 27(6), pages 657-663. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:eee:soceco:v:38:y:2009:i:4:p:549-556. See general information about how to correct material in RePEc.
If references are entirely missing, you can add them using this form.