Game theory
analysis of interaction between rational agents that share common knowledge of rules
- assumed common knowledge of rationality - assume rationality of other players
- people cooperate more often than game theory predicts
Behavioural game theory
study of how people actually behave in interactive situations
Prisoner’s Dilemma
- Joint defection = nash equilibrium – combination of strategies that cannot be improved upon, as long as the other player sticks to the strategy
- As there is only one equilibrium point (in other cases there can be more), mutual defection is seen as the dominant strategy
Public Goods Game
- Best collectively rational strategy is to contribute
- Best individual strategy is not to contribute
Dictator Game
- Two anonymous players are allotted a sum of money (= stake) in a one-shot interaction
- Player 1 decides how to divide the money between the two
- Player 2 receives allocation & game ends
- -> Purer measure of intrinsic motivation for equal offers
Ultimatum Game
- Two anonymous players are allotted a sum of money (= stake) in a one-shot interaction
- Player 1 decides how to divide the money between the two
- Player 2 accepts/ rejects possible offers before hearing the actual offer
- If he/she doesn’t accept, no one gets anything
Third-Party Punishment Game
- Two anonymous players are allotted a sum of money (= stake) in a one-shot interaction
- Player 1 decides how to divide the money between the two
- Player 2 has no choice
- Player 3 (gets additional 50% of stake), before hearing the actual offer, decides which offers to punish with what amount of money
- If punished, player 1 loses triple the amount payed by player 3
Evolution of Cooperation
- nice rules: begin by cooperating - were played upon by nasty strategies
- nasty rules: begin by defecting - died out when there was no prey left
most successful strategy was tit-for-tat
support: fairness to anonymous others positively correlates with market integration and adherence to world religions
Factors influencing extent of cooperation
- consideration of others
- empathy
- fear
- differences in values
- trust
- generosity
- communication
Consideration of others
- Less cooperation when it was known that the other cooperated (went from 37% to 16%)
- Perspective taking reduces cooperation
- Thinking harder about a task reduces cooperation (more likely to behave fairly when less capacity for thinking)
Empathy
- Critical for social functioning & promotes prosocial behaviour
- Empathic failures – cases in which individuals could feel empathy but don’t due to salient social & psychological factors
- Empathy alone may be insufficient to produce pro-social behaviour (esp. when parties differ in status/power)
- Interventions should promote equitable goals & norms in addition to empathy
Fear
- Either of being taken for a sucker or of being punished for acting in self-interest
- Fear of defection leads to defection, fear of free-riders leads to free-riding
- once fear is removed people behave in a greedy fashion (greed has a stronger effect)
- revenge effects (punishment motivated by anger)
Differences in Values
- People can be categorised according to their social value orientation
- – Prosocial – maximise joint gain & equality in outcomes (most upward, fewest downward counterfactuals more cooperation)
- – Individualist – maximise own gains (same number of each type)
- – Competitors – maximise relative gain (= difference between one’s own and the other’s outcome) (reversed pattern as compared to prosocial)
- Values can be learned
Trust
- trust leads to increased cooperation
- More likely to trust people with good reputation
- Prisoner’s dilemma: more cooperation when play against the same person
- Emotions affect trust ratings of others (except for family members)
- – Anger = more trust, gratitude/happiness = less trust
Generosity
- Noise – erroneous response –> when one cannot show trust to someone else due to circumstances they had no control over (e.g. car accident on the way to work
- Can be solved by adding generosity or forgiveness
Communication
- If one can’t be generous, communication helps
- Can eliminate detrimental effects of noise (esp. in people with low-trust dispositions)
- Increases cooperation because it promotes group solidarity & allows to express commitment to mutually cooperate
Moralistic Punishment
fosters group cooperation as punishment of non-cooperators motivates them to cooperate
Antisocial punishment
punishment of high cooperators destabilises group cooperation & reduces the beneficial effects of moralistic punishment (most often lowest target highest cooperators)
- function as a way to prevent one’s competitors from gaining relative reputation which could make oneself look worse by comparison
Do-gooder derogation
people who help others get criticised & ridiculed for their efforts
- function as a way to prevent one’s competitors from gaining relative reputation which could make oneself look worse by comparison
Normative theory
punishment of all deviators no matter which direction
Biological markets theory (Barclay)
we choose partners for their cooperative interactions hence we try to outbid each other in order to be chosen (= competitive helping)
Psychological game theory
appraisals associated with anger/guilt may be captured as changes in an agent’s expected payoff following a new event/outcome
Appraisal theory
emotions are adaptive responses elicited based on how an agent evaluates its situation
Guilt aversion
belief -dependent guilt enables cooperation
