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Two-Person Cooperative Games with delta-Rationality

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  • Fang-Fang Tang
  • Yongsheng Xu

Abstract

A player's payoff is modeled as consisting of two parts: a rational-value part and a distortion-value part. It is argued that the (total) payoff function should be used to explain and predict the behaviors of the players, while the rational value function should be used to conduct welfare analysis of the final outcome. We use the Nash demand game to illustrate our model.

Suggested Citation

  • Fang-Fang Tang & Yongsheng Xu, 2025. "Two-Person Cooperative Games with delta-Rationality," Papers 2506.16465, arXiv.org.
    • Handle: RePEc:arx:papers:2506.16465
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    References listed on IDEAS

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    1. P. K. Pattanaik & Yongsheng Xu, 2024. "Measurement of Deprivation," Economic Studies in Inequality, Social Exclusion, and Well-Being, in: Multidimensional Well-Being, Deprivation and Inequality, chapter 0, pages 115-129, Springer.
    2. Nick Baigent, 1995. "Behind The Veil Of Preference," The Japanese Economic Review, Japanese Economic Association, vol. 46(1), pages 88-101, March.
    3. Fehr, Ernst & Schmidt, Klaus M., 2006. "The Economics of Fairness, Reciprocity and Altruism - Experimental Evidence and New Theories," Handbook on the Economics of Giving, Reciprocity and Altruism, in: S. Kolm & Jean Mercier Ythier (ed.), Handbook of the Economics of Giving, Altruism and Reciprocity, edition 1, volume 1, chapter 8, pages 615-691, Elsevier.
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