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Equilibrium Vengeance

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  • Daniel Friedman
  • Nirvikar Singh

Abstract

This paper introduces two ideas, emotional state dependent utility components (ESDUCs), and evolutionary perfect Bayesian equilibrium (EPBE). Using a simple extensive form game, we illustrate the efficiency-enhancing role of a powerful ESDUC, the vengeance motive. Incorporating behavioral noise and observational noise leads to a range of (short run) Perfect Bayesian equilibria (PBE) involving both vengeful and non-vengeful types. We then derive two (long run) EPBE, one where both types survive and reap mutual gains, and a second where only the non-vengeful type survives and there are no mutual gains.

Suggested Citation

  • Daniel Friedman & Nirvikar Singh, 2002. "Equilibrium Vengeance," CESifo Working Paper Series 766, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_766
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    Citations

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    Cited by:

    1. Jean Paul Rabanal, 2017. "On the Evolution of Continuous Types Under Replicator and Gradient Dynamics: Two Examples," Dynamic Games and Applications, Springer, vol. 7(1), pages 76-92, March.
    2. Friedman, Daniel & Singh, Nirvikar, 2003. "Negative Reciprocity: The Coevolution of Memes and Genes," Santa Cruz Department of Economics, Working Paper Series qt8n49r3t2, Department of Economics, UC Santa Cruz.
    3. Friedman, Daniel & Singh, Nirvikar, 2004. "Vengefulness Evolves in Small Groups," Santa Cruz Department of Economics, Working Paper Series qt0xp29105, Department of Economics, UC Santa Cruz.
    4. Guttman, Joel M., 2013. "On the evolution of conditional cooperation," European Journal of Political Economy, Elsevier, vol. 30(C), pages 15-34.
    5. 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.
    6. Arce, Daniel G., 2013. "Principals’ preferences for agents with social preferences," Journal of Economic Behavior & Organization, Elsevier, vol. 90(C), pages 154-163.
    7. Jean Rabanal & Daniel Friedman, 2014. "Incomplete Information, Dynamic Stability and the Evolution of Preferences: Two Examples," Dynamic Games and Applications, Springer, vol. 4(4), pages 448-467, December.

    More about this item

    Keywords

    negative reciprocity; perfect Bayesian equilibrium; evolutionary perfect Bayesian equilibrium; emotional state dependent utility;

    JEL classification:

    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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