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Evolving aspirations and cooperation

  • Debraj Ray

    (Dpt. Economics)

  • Dilip Mookherjee

    (London School of Economics - LSE)

  • Fernando Vega Redondo

    (Instituto Valenciano de Investigaciones Económicas)

  • Rajeeva L. Karandikar

    (Indian Statistical Institute)

A model of "satisficing" behavior in the repeated Prisoners Dilemma is studied. Each player has an aspiration at each date, and takes an action. [S]he switches from the action played in the previous period only if the achieved payoff fell below the aspiration level (with a probability that depends on the shortfall). Aspirations are updated in each period, according to payoff experience in the previous period In addition, aspirations are subjected to random perturbations around the going level, with a small "tremble" probability. For sufficiently slow updating of aspirations, and small tremble probability, it is shown that in the long run both players cooperate most of the time.

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Paper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number 1996-06.

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Length: 39 pages
Date of creation: Jan 1996
Date of revision:
Publication status: Published by Ivie
Handle: RePEc:ivi:wpasad:1996-06
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  1. Kandori, M. & Mailath, G.J., 1991. "Learning, Mutation, And Long Run Equilibria In Games," Papers 71, Princeton, Woodrow Wilson School - John M. Olin Program.
  2. Barry Sopher & Dilip Mookherjee, 1997. "Learning and Decision Costs in Experimental Constant Sum Games," Departmental Working Papers 199527, Rutgers University, Department of Economics.
  3. Fudenberg, Drew & Maskin, Eric, 1990. "Evolution and Cooperation in Noisy Repeated Games," American Economic Review, American Economic Association, vol. 80(2), pages 274-79, May.
  4. Itzhak Gilboa & David Schmeidler, 1992. "Case-Based Decision Theory," Discussion Papers 994, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  5. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
  6. Amit Pazgal, 1995. "Satisficing Leads to Cooperation in Mutual Interests Games," Discussion Papers 1126, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  7. Kalai, Ehud & Lehrer, Ehud, 1993. "Rational Learning Leads to Nash Equilibrium," Econometrica, Econometric Society, vol. 61(5), pages 1019-45, September.
  8. Selten, Reinhard & Stoecker, Rolf, 1986. "End behavior in sequences of finite Prisoner's Dilemma supergames A learning theory approach," Journal of Economic Behavior & Organization, Elsevier, vol. 7(1), pages 47-70, March.
  9. Binmore, Kenneth G. & Samuelson, Larry, 1992. "Evolutionary stability in repeated games played by finite automata," Journal of Economic Theory, Elsevier, vol. 57(2), pages 278-305, August.
  10. Mookherjee Dilip & Sopher Barry, 1994. "Learning Behavior in an Experimental Matching Pennies Game," Games and Economic Behavior, Elsevier, vol. 7(1), pages 62-91, July.
  11. Selten,Reinhard, . "Evolution,learning and economic behaviour," Discussion Paper Serie B 132, University of Bonn, Germany.
  12. Roth, Alvin E. & Erev, Ido, 1995. "Learning in extensive-form games: Experimental data and simple dynamic models in the intermediate term," Games and Economic Behavior, Elsevier, vol. 8(1), pages 164-212.
  13. Arthur, W Brian, 1993. "On Designing Economic Agents That Behave Like Human Agents," Journal of Evolutionary Economics, Springer, vol. 3(1), pages 1-22, February.
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