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How Moral Codes Evolve in a Trust Game

Author

Listed:
  • Jean Paul Rabanal

    () (Economics Department, Ball State University, 2000 W. University Ave. Muncie, IN 47306, USA)

  • Daniel Friedman

    () (Department of Economics, University of California Santa Cruz, 1156 High Street, Santa Cruz, CA 95064, USA)

Abstract

This paper analyzes the dynamic stability of moral codes in a two population trust game. Guided by a moral code, members of one population, the Trustors, are willing to punish members of the other population, the Trustees, who defect. Under replicator dynamics, adherence to the moral code has unstable oscillations around an interior Nash Equilibrium (NE), but under smoothed best response dynamics we obtain convergence to Quantal Response Equilibrium (QRE).

Suggested Citation

  • Jean Paul Rabanal & Daniel Friedman, 2015. "How Moral Codes Evolve in a Trust Game," Games, MDPI, Open Access Journal, vol. 6(2), pages 1-11, June.
  • Handle: RePEc:gam:jgames:v:6:y:2015:i:2:p:150-160:d:50656
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    References listed on IDEAS

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    1. Schlag, Karl H., 1999. "Which one should I imitate?," Journal of Mathematical Economics, Elsevier, vol. 31(4), pages 493-522, May.
    2. Friedman, Daniel & Singh, Nirvikar, 2009. "Equilibrium vengeance," Games and Economic Behavior, Elsevier, vol. 66(2), pages 813-829, July.
    3. Theodore C. Bergstrom, 2002. "Evolution of Social Behavior: Individual and Group Selection," Journal of Economic Perspectives, American Economic Association, vol. 16(2), pages 67-88, Spring.
    4. Jorgen W. Weibull, 1997. "Evolutionary Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262731215, August.
    5. Blume Lawrence E., 1993. "The Statistical Mechanics of Strategic Interaction," Games and Economic Behavior, Elsevier, vol. 5(3), pages 387-424, July.
    6. Gaunersdorfer Andrea & Hofbauer Josef, 1995. "Fictitious Play, Shapley Polygons, and the Replicator Equation," Games and Economic Behavior, Elsevier, vol. 11(2), pages 279-303, November.
    7. Kandori, Michihiro & Mailath, George J & Rob, Rafael, 1993. "Learning, Mutation, and Long Run Equilibria in Games," Econometrica, Econometric Society, vol. 61(1), pages 29-56, January.
    8. Brennan, Geoffrey & Pettit, Philip, 2004. "The Economy of Esteem: An Essay on Civil and Political Society," OUP Catalogue, Oxford University Press, number 9780199246489.
    9. Drew Fudenberg & David K. Levine, 1998. "The Theory of Learning in Games," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061945, August.
    10. Pierre Courtois & Tarik Tazdaït, 2012. "Learning to trust strangers: an evolutionary perspective," Journal of Evolutionary Economics, Springer, vol. 22(2), pages 367-383, April.
    11. Brennan,Geoffrey & Hamlin,Alan, 2000. "Democratic Devices and Desires," Cambridge Books, Cambridge University Press, number 9780521630207, December.
    12. Daniel G. Arce, 2006. "Taking Corporate Culture Seriously: Group Effects in the Trust Game," Southern Economic Journal, Southern Economic Association, vol. 73(1), pages 27-36, July.
    13. Gale, John & Binmore, Kenneth G. & Samuelson, Larry, 1995. "Learning to be imperfect: The ultimatum game," Games and Economic Behavior, Elsevier, vol. 8(1), pages 56-90.
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    Citations

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    Cited by:

    1. Berger, Ulrich, 2016. "Learning to trust, learning to be trustworthy," Department of Economics Working Paper Series 212, WU Vienna University of Economics and Business.
    2. Ulrich Berger, 2016. "Learning to trust, learning to be trustworthy," Department of Economics Working Papers wuwp212, Vienna University of Economics and Business, Department of Economics.

    More about this item

    Keywords

    Prisoner’s Dilemma; evolutionary stability; moral codes;

    JEL classification:

    • C - Mathematical and Quantitative Methods
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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