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Risk attitudes and risk dominance in the long run

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  • Nax, Heinrich H.
  • Newton, Jonathan

Abstract

This paper investigates the role that risk attitudes play in the evolution of conventions in the long run. Risk aversion is shown to be associated with the evolution of maximin conventions, and risk seeking with the evolution of payoff dominant conventions.

Suggested Citation

  • Nax, Heinrich H. & Newton, Jonathan, 2019. "Risk attitudes and risk dominance in the long run," Games and Economic Behavior, Elsevier, vol. 116(C), pages 179-184.
    • Handle: RePEc:eee:gamebe:v:116:y:2019:i:c:p:179-184
    DOI: 10.1016/j.geb.2019.05.001
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    References listed on IDEAS

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    1. Jonathan Newton, 2018. "Evolutionary Game Theory: A Renaissance," Games, MDPI, vol. 9(2), pages 1-67, May.
    2. Peski, Marcin, 2010. "Generalized risk-dominance and asymmetric dynamics," Journal of Economic Theory, Elsevier, vol. 145(1), pages 216-248, January.
    3. Ennio Bilancini & Leonardo Boncinelli, 2020. "The evolution of conventions under condition-dependent mistakes," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 69(2), pages 497-521, March.
    4. Hwang, Sung-Ha & Lim, Wooyoung & Neary, Philip & Newton, Jonathan, 2018. "Conventional contracts, intentional behavior and logit choice: Equality without symmetry," Games and Economic Behavior, Elsevier, vol. 110(C), pages 273-294.
    5. Newton, Jonathan & Angus, Simon D., 2015. "Coalitions, tipping points and the speed of evolution," Journal of Economic Theory, Elsevier, vol. 157(C), pages 172-187.
    6. Bergin, James & Lipman, Barton L, 1996. "Evolution with State-Dependent Mutations," Econometrica, Econometric Society, vol. 64(4), pages 943-956, July.
    7. 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.
    8. Mäs, Michael & Nax, Heinrich H., 2016. "A behavioral study of “noise” in coordination games," Journal of Economic Theory, Elsevier, vol. 162(C), pages 195-208.
    9. Norman, Thomas W.L., 2009. "Rapid evolution under inertia," Games and Economic Behavior, Elsevier, vol. 66(2), pages 865-879, July.
    10. Sawa, Ryoji & Wu, Jiabin, 2018. "Reference-dependent preferences, super-dominance and stochastic stability," Journal of Mathematical Economics, Elsevier, vol. 78(C), pages 96-104.
    11. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
    12. Blume, Lawrence E., 2003. "How noise matters," Games and Economic Behavior, Elsevier, vol. 44(2), pages 251-271, August.
    13. Sawa, Ryoji & Wu, Jiabin, 2018. "Prospect dynamics and loss dominance," Games and Economic Behavior, Elsevier, vol. 112(C), pages 98-124.
    14. Tom Norman, 2009. "Skew-Symmetry Under Simultaneous Revisions," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 11(04), pages 471-478.
    15. Lim, Wooyoung & Neary, Philip R., 2016. "An experimental investigation of stochastic adjustment dynamics," Games and Economic Behavior, Elsevier, vol. 100(C), pages 208-219.
    16. Jonathan Weinstein, 2016. "The Effect of Changes in Risk Attitude on Strategic Behavior," Econometrica, Econometric Society, vol. 84, pages 1881-1902, September.
    17. Mäs, Michael & Nax, Heinrich H., 2016. "A behavioral study of “noise” in coordination games," LSE Research Online Documents on Economics 65422, London School of Economics and Political Science, LSE Library.
    18. Maruta, Toshimasa, 2002. "Binary Games with State Dependent Stochastic Choice," Journal of Economic Theory, Elsevier, vol. 103(2), pages 351-376, April.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Sawa, Ryoji & Wu, Jiabin, 2023. "Statistical inference in evolutionary dynamics," Games and Economic Behavior, Elsevier, vol. 137(C), pages 294-316.
    2. Hwang, Sung-Ha & Rey-Bellet, Luc, 2021. "Positive feedback in coordination games: Stochastic evolutionary dynamics and the logit choice rule," Games and Economic Behavior, Elsevier, vol. 126(C), pages 355-373.
    3. Bilancini, Ennio & Boncinelli, Leonardo & Vicario, Eugenio, 2024. "Memory retrieval in the demand game with a few possible splits: Unfair conventions emerge in fair settings," Journal of Economic Dynamics and Control, Elsevier, vol. 165(C).
    4. Terence C. Burnham & Jay Phelan, 2022. "Ordinaries 10," Journal of Bioeconomics, Springer, vol. 24(3), pages 181-202, October.
    5. Eugenio Vicario, 2021. "Imitation and Local Interactions: Long Run Equilibrium Selection," Games, MDPI, vol. 12(2), pages 1-19, April.
    6. Khan, Abhimanyu, 2022. "Expected utility versus cumulative prospect theory in an evolutionary model of bargaining," Journal of Economic Dynamics and Control, Elsevier, vol. 137(C).

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    More about this item

    Keywords

    Evolution; Conventions; Risk attitudes; Loss aversion; Concave utility; State dependence;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

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