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A General Game-Theoretic Model of Preference Adaptations in Problematic Social Situations

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  • WERNER RAUB

    (University of Utrecht)

Abstract

This article analyzes the active and intentional modification of preferences as a mechanism of cooperation in “problematic†social situations (i.e., situations where individually rational behavior generates outcomes that are suboptimal in the Pareto sense). It is shown that an intentional modification of preferences in such situations can result in a generalization of Sen's Assurance Game preferences. As a formal framework for the analysis, a noncooperative N-person preference adaptation game is used. In this game, actors are able to choose effective preference orderings of outcomes in an underlying problematic situation. Under rather general conditions, mutual choice of generalized Assurance Game preferences is an ε-equilibrium point (Radner) in a preference adaptation game.

Suggested Citation

  • Werner Raub, 1990. "A General Game-Theoretic Model of Preference Adaptations in Problematic Social Situations," Rationality and Society, , vol. 2(1), pages 67-93, January.
    • Handle: RePEc:sae:ratsoc:v:2:y:1990:i:1:p:67-93
    DOI: 10.1177/1043463190002001004
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    References listed on IDEAS

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    1. John C. Harsanyi & Reinhard Selten, 1988. "A General Theory of Equilibrium Selection in Games," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262582384, April.
    2. Frank, Robert H, 1987. "If Homo Economicus Could Choose His Own Utility Function, Would He Want One with a Conscience?," American Economic Review, American Economic Association, vol. 77(4), pages 593-604, September.
    3. Radner, Roy, 1980. "Collusive behavior in noncooperative epsilon-equilibria of oligopolies with long but finite lives," Journal of Economic Theory, Elsevier, vol. 22(2), pages 136-154, April.
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    1. Ramalingam, Abhijit, 2009. ""Endogenous" Relative Concerns: The Impact of Workers' Characteristics on Status and Pro ts in the Firm," MPRA Paper 18759, University Library of Munich, Germany.
    2. Abhijit Ramalingam & Michael T. Rauh, 2010. "The Firm as a Socialization Device," Management Science, INFORMS, vol. 56(12), pages 2191-2206, December.
    3. Guttman, Joel M., 2001. "Self-enforcing reciprocity norms and intergenerational transfers: theory and evidence," Journal of Public Economics, Elsevier, vol. 81(1), pages 117-151, July.
    4. Schmidt, David & Shupp, Robert & Walker, James & Ahn, T. K. & Ostrom, Elinor, 2001. "Dilemma games: game parameters and matching protocols," Journal of Economic Behavior & Organization, Elsevier, vol. 46(4), pages 357-377, December.
    5. Abhijit Ramalingam & Michael Rauh, 2008. "Firms, Markets, and the Work Ethic," Working Papers 2008-04, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
    6. Thomas Wagner, 1998. "Reciprocity And Efficiency," Rationality and Society, , vol. 10(3), pages 347-375, August.
    7. Rotemberg, Julio J, 1994. "Human Relations in the Workplace," Journal of Political Economy, University of Chicago Press, vol. 102(4), pages 684-717, August.
    8. Ramalingam, Abhijit, 2014. "On the value of relative comparisons in firms," Economics Letters, Elsevier, vol. 124(3), pages 446-448.
    9. Sally, David, 2001. "On sympathy and games," Journal of Economic Behavior & Organization, Elsevier, vol. 44(1), pages 1-30, January.
    10. Guttman, Joel M., 2000. "On the evolutionary stability of preferences for reciprocity," European Journal of Political Economy, Elsevier, vol. 16(1), pages 31-50, March.
    11. Alberto Bisin & Giorgio Topa & Thierry Verdier, 2004. "Cooperation as a Transmitted Cultural Trait," Rationality and Society, , vol. 16(4), pages 477-507, November.
    12. Ramon Casadesus-Masanell & Tarun Khanna, 2003. "Globalization and Trust: Theory and Evidence from Cooperatives," William Davidson Institute Working Papers Series wp592, William Davidson Institute at the University of Michigan.

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