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A Theory of Sequential Reciprocity

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  • Dufwenberg, M.
  • Kirchsteiger, G.

Abstract

Many experimental studies indicate that people are motivated by reciprocity. Rabin (1993) develops techniques for incorporating such concerns into game theory and economics. His model, however, does not fare well when applied to situations with an interesting dynamic structure (like many experimental games), because it is developed for normal form games in which information about the sequential structure of a strategic situation is suppressed. In this paper we develop a theory of reciprocity for extensive games in which the sequential structure of a strategic situation is made explicit. We propose a new solution concept— sequential reciprocity equilibrium—which is applicable to extensive games, and we prove a general equilibrium existence result. The model is applied in several examples, including some well known experimental games like the Ultimatum game and the Sequential Prisoners’ Dilemma.
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Suggested Citation

  • Dufwenberg, M. & Kirchsteiger, G., 1998. "A Theory of Sequential Reciprocity," Other publications TiSEM c19f51ac-cd7f-479b-8892-b, Tilburg University, School of Economics and Management.
    • Handle: RePEc:tiu:tiutis:c19f51ac-cd7f-479b-8892-b213966fa271
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    JEL classification:

    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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