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The role of fairness motives and spatial considerations in explaining departures from Nash equilibrium: stationary and evolutionary lessons from 2x2 games

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  • Tavoni, Alessandro

Abstract

Substantial evidence has accumulated in recent empirical works on the limited ability of the Nash equilibrium to rationalize observed behavior in many classes of games played by experimental subjects. This realization has led to several attempts aimed at finding tractable equilibrium concepts which perform better empirically, often by introducing a reference point to which players compare the available payoff allocations, as in impulse balance equilibrium and in the inequity aversion model. The first part of this paper is concerned with reviewing the recent reference point literature and advancing a new, empirically sound, hybrid concept. In the second part, evolutionary game theoretic models are employed to investigate the role played by fairness motives as well as spatial structure in explaining the evolution of cooperative behavior.

Suggested Citation

  • Tavoni, Alessandro, 2008. "The role of fairness motives and spatial considerations in explaining departures from Nash equilibrium: stationary and evolutionary lessons from 2x2 games," MPRA Paper 9252, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:9252
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    File URL: https://mpra.ub.uni-muenchen.de/9252/1/MPRA_paper_9252.pdf
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    References listed on IDEAS

    as
    1. Ernst Fehr & Klaus M. Schmidt, 1999. "A Theory of Fairness, Competition, and Cooperation," The Quarterly Journal of Economics, Oxford University Press, vol. 114(3), pages 817-868.
    2. Erev, Ido & Roth, Alvin E, 1998. "Predicting How People Play Games: Reinforcement Learning in Experimental Games with Unique, Mixed Strategy Equilibria," American Economic Review, American Economic Association, vol. 88(4), pages 848-881, September.
    3. Sandholm, William H., 1998. "Simple and clever decision rules for a model of evolution," Economics Letters, Elsevier, vol. 61(2), pages 165-170, November.
    4. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-291, March.
    5. 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.
    6. Ely, Jeffrey C. & Yilankaya, Okan, 2001. "Nash Equilibrium and the Evolution of Preferences," Journal of Economic Theory, Elsevier, vol. 97(2), pages 255-272, April.
    7. Ok, Efe A. & Vega-Redondo, Fernando, 2001. "On the Evolution of Individualistic Preferences: An Incomplete Information Scenario," Journal of Economic Theory, Elsevier, vol. 97(2), pages 231-254, April.
    8. Possajennikov, Alex, 2000. "On the evolutionary stability of altruistic and spiteful preferences," Journal of Economic Behavior & Organization, Elsevier, vol. 42(1), pages 125-129, May.
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    More about this item

    Keywords

    Other-regarding preferences; Inequity aversion; Endogenous preferences; Evolutionary stability; Prisoner’s dilemma;

    JEL classification:

    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary
    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • 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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