A Re-Interpretation of Nash Equilibrium Based on the Notion of Social Institutions
We define social institutions as strategies in some repeated game. With this interpretation in mind, we consider the impact of introducing requirements on strategies which have been viewed as necessary properties for any social institution to endure. The properties we study are finite complexity, symmetry, global stability, and semi-perfection. We show that: (1) If a strategy satisfies these properties then players play a Nash equilibrium of the stage game in every period; (2) The set of finitely complex, symmetric, globally stable, semi-perfect equilibrium payoffs in the repeated game equals the set of Nash equilibria payoffs in the stage game; and (3) A strategy vector satisfies these properties in a Pareto optimal way if and only if players play some Pareto optimal Nash equilibrium of the stage game in every stage. These results provide a social institution interpretation of Nash equilibrium: individual behavior in enduring social institutions is described by Nash equilibria.
|Date of creation:||19 Nov 2003|
|Date of revision:|
|Note:||Type of Document - pdf; prepared on win xp; to print on general; pages: 23; figures: 0. none|
|Contact details of provider:|| Web page: http://econwpa.repec.org|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Fudenberg, Drew & Maskin, Eric, 1986. "The Folk Theorem in Repeated Games with Discounting or with Incomplete Information," Econometrica, Econometric Society, vol. 54(3), pages 533-54, May.
- Banks, J.S. & Sundaram, R.K., 1989.
"Repeated Games, Finite Automata, And Complexity,"
RCER Working Papers
183, University of Rochester - Center for Economic Research (RCER).
- Aumann, Robert & Brandenburger, Adam, 1995.
"Epistemic Conditions for Nash Equilibrium,"
Econometric Society, vol. 63(5), pages 1161-80, September.
- Rubinstein, Ariel, 1979. "Equilibrium in supergames with the overtaking criterion," Journal of Economic Theory, Elsevier, vol. 21(1), pages 1-9, August.
- Abreu, Dilip & Rubinstein, Ariel, 1988. "The Structure of Nash Equilibrium in Repeated Games with Finite Automata," Econometrica, Econometric Society, vol. 56(6), pages 1259-81, November.
- Green, Edward J., 1980. "Noncooperative price taking in large dynamic markets," Journal of Economic Theory, Elsevier, vol. 22(2), pages 155-182, April.
- Sabourian, Hamid, 1990. "Anonymous repeated games with a large number of players and random outcomes," Journal of Economic Theory, Elsevier, vol. 51(1), pages 92-110, June.
- Piccione, Michele, 1992. "Finite automata equilibria with discounting," Journal of Economic Theory, Elsevier, vol. 56(1), pages 180-193, February.
- Carmona, Guilherme, 2002.
"On the Notion of Social Institutions,"
FEUNL Working Paper Series
wp421, Universidade Nova de Lisboa, Faculdade de Economia.
- Okuno-Fujiwara Masahiro & Postlewaite Andrew, 1995. "Social Norms and Random Matching Games," Games and Economic Behavior, Elsevier, vol. 9(1), pages 79-109, April.
- Barlo, Mehmet & Carmona, Guilherme, 2015.
"Strategic behavior in non-atomic games,"
Journal of Mathematical Economics,
Elsevier, vol. 60(C), pages 134-144.
- Al-Najjar, Nabil I. & Smorodinsky, Rann, 2001. "Large Nonanonymous Repeated Games," Games and Economic Behavior, Elsevier, vol. 37(1), pages 26-39, October.
- Michihiro Kandori, 1992. "Social Norms and Community Enforcement," Review of Economic Studies, Oxford University Press, vol. 59(1), pages 63-80.
- Kalai, Ehud & Stanford, William, 1988.
"Finite Rationality and Interpersonal Complexity in Repeated Games,"
Econometric Society, vol. 56(2), pages 397-410, March.
- Ehud Kalai & William Stanford, 1986. "Finite Rationality and Interpersonal Complexity in Repeated Games," Discussion Papers 679, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Ehud Kalai, 1987. "Bounded Rationality and Strategic Complexity in Repeated Games," Discussion Papers 783, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Lipman, Barton L. & Srivastava, Sanjay, 1990. "Informational requirements and strategic complexity in repeated games," Games and Economic Behavior, Elsevier, vol. 2(3), pages 273-290, September.
When requesting a correction, please mention this item's handle: RePEc:wpa:wuwpga:0311005. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (EconWPA)
If references are entirely missing, you can add them using this form.