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Behavioral Properties of Correlated Equilibrium; Social Group Structures with Conformity and Stereotyping

  • Edward Cartwright


    (Department of Economics, Keynes College, University of Kent)

  • Myrna Wooders


    (Department of Economics, Vanderbilt University)

We explore the potential for correlated equilibrium to capture conformity to norms and the coordination of behavior within social groups. Given a partition of players into social groups we propose properties that one may expect of a correlated equilibrium: within-group anonymity, group independence, predictable group behavior and stereotyped beliefs. We then demonstrate that (a) a correlated equilibrium satisfying these properties exists in games with many players (b) a player who stereotypes other players cannot do better with correct beliefs and (c) correlation allows predictability of group behavior, which ensures that a correlated equilibrium is approximately ex-post stable.

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Paper provided by Vanderbilt University Department of Economics in its series Vanderbilt University Department of Economics Working Papers with number 0814.

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Date of creation: Aug 2008
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Handle: RePEc:van:wpaper:0814
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  1. Cartwright, Edward & Wooders, Myrna, 2003. "Conformity and Bounded Rationality in Games with Many Players," The Warwick Economics Research Paper Series (TWERPS) 687, University of Warwick, Department of Economics.
  2. Bernheim, B Douglas, 1994. "A Theory of Conformity," Journal of Political Economy, University of Chicago Press, vol. 102(5), pages 841-77, October.
  3. Myrna Wooders & Edward Cartwright & Reinhard Selten, 2005. "Behavioral Conformity in Games with Many Players," Vanderbilt University Department of Economics Working Papers 0513, Vanderbilt University Department of Economics.
  4. Cartwright, Edward & Wooders, Myrna, 2003. "On Equilibrium in Pure Stategies in Games with Many Players," The Warwick Economics Research Paper Series (TWERPS) 686, University of Warwick, Department of Economics.
  5. Myerson, R B, 1986. "Acceptable and Predominant Correlated Equilibria," International Journal of Game Theory, Springer;Game Theory Society, vol. 15(3), pages 133-54.
  6. Sergiu Hart, 2005. "Adaptive Heuristics," Econometrica, Econometric Society, vol. 73(5), pages 1401-1430, 09.
  7. Gabrielle Demange, 2004. "Group formation: The interaction of increasing returns and preferences' diversity," DELTA Working Papers 2004-30, DELTA (Ecole normale supérieure).
  8. Fehr, Ernst & Schmidt, Klaus M., 1998. "A Theory of Fairness, Competition and Cooperation," CEPR Discussion Papers 1812, C.E.P.R. Discussion Papers.
  9. Gravel, Nicolas & Thoron, Sylvie, 2007. "Does endogenous formation of jurisdictions lead to wealth-stratification?," Journal of Economic Theory, Elsevier, vol. 132(1), pages 569-583, January.
  10. F. Forges, 2010. "An Approach to Communication Equilibrium," Levine's Working Paper Archive 516, David K. Levine.
  11. Edward Cartwright & Myrna Wooders, 2005. "Correlated Equilibrium and Behavioral Conformity," Vanderbilt University Department of Economics Working Papers 0526, Vanderbilt University Department of Economics.
  12. ., 1998. "Game Theory," Chapters, in: The Handbook of Economic Methodology, chapter 42 Edward Elgar Publishing.
  13. George A. Akerlof, 1980. "A Theory of Social Custom, of which Unemployment may be One Consequence," The Quarterly Journal of Economics, Oxford University Press, vol. 94(4), pages 749-775.
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