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Group Fairness and Game Theory

  • Alejandro Tatsuo Moreno


    (Department of Economics and Finance, Universidad de Guanajuato)

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    In this paper I extend Matthew Rabin’s model of fairness equilibria (1993) to groups of individuals. This allow me to introduce three aspects from reality that are absent in game theory: i) individuals discriminate in favor of members of their own groups, ii) individuals like individuals that not only are kind to them, but are kind to other individuals, specially individuals of their own groups, and iii) individuals discrimate in favor of members of groups they like. I define a new equilibrium that takes in consideration this emotions, what I call group fairness equilibrium. Rabin defines the mutual-max outcomes for a single game as outcomes where each player maximize the other player’s material mayoffs and the mutual-min outcomes as outcomes where each player minimize the other player’s material payoffs. Some basic results of my model are that a combination of strict Nash equilibrium in several games, will always be a group fairness equibrium for large values of the material payoffs, and that any outcome that is either strictly mutual-max for both games or strictly mutual-min for both games is a group fairness equilibrium for large values of the material payoffs.

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    File Function: Revised version, 2008
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    Paper provided by Universidad de Guanajuato, Department of Economics and Finance in its series Department of Economics and Finance Working Papers with number EC200702.

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    Length: 26 pages
    Date of creation: Dec 2007
    Date of revision: Jun 2008
    Handle: RePEc:gua:wpaper:ec200702
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