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Learning to be fair

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  • Andreozzi, Luciano

Abstract

We study the process of equilibrium selection in games when players have social preferences of the type discussed, among others, by Rabin (1993) and Segal and Sobel (2007). To this end, we employ a standard noisy version of the best response dynamics. We obtain several results concerning some popular games such as the Prisoner's Dilemma and the Battle of the Sexes. We show that reciprocity may have a negative effect on the equilibrium selection process. When players are sufficiently concerned with reciprocity, the stochastically stable equilibrium in the Battle of the Sexes is inefficient. At the same time, the cooperative equilibrium in the Prisoner's Dilemma is never stochastically stable.

Suggested Citation

  • Andreozzi, Luciano, 2013. "Learning to be fair," Journal of Economic Behavior & Organization, Elsevier, vol. 90(C), pages 181-195.
    • Handle: RePEc:eee:jeborg:v:90:y:2013:i:c:p:181-195
    DOI: 10.1016/j.jebo.2011.10.005
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    Cited by:

    1. Ying Tang & Andrea Moro & Sandro Sozzo & Zhiyong Li, 2018. "Modelling trust evolution within small business lending relationships," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 4(1), pages 1-18, December.

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    More about this item

    Keywords

    Learning; Altruism; Psychological games; Stochastic stability; Best response dynamics;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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