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Social Comparisons as a device for cooperation in simultaneous-move games

Author

Listed:
  • Felix Munoz-Garcia

    (School of Economic Sciences, Washington State University)

Abstract

This paper analyzes the effects of players' relative comparisons in complete information simultaneous-move games. In particular, every individual is assumed to evaluate the kindness she infers from other players'choices by comparing these choices with respect to a given refer- ence level. Specifically, this paper identifies under what conditions the introduction of relative comparisons leads players to be more cooperative than in standard game-theoretic models. I show that this result holds under certain conditions on the specific reference point that players use in their relative comparisons, and on whether players'relative comparisons leads them to regard each others' actions as more strategic complementary or substitutable. The model is then applied to different examples in public good games which enhance the intuition behind the results. Finally, I show that some existing models in the literature of intentions-based reciprocity and social status acquisition can be rationalized as special cases.

Suggested Citation

  • Felix Munoz-Garcia, 2008. "Social Comparisons as a device for cooperation in simultaneous-move games," Working Papers 2008-11, School of Economic Sciences, Washington State University.
    • Handle: RePEc:wsu:wpaper:munoz-1
    as

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    File URL: http://faculty.ses.wsu.edu/WorkingPapers/Munoz/Reference-points-simultaneous-move-games.pdf
    File Function: First version, 2008
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    References listed on IDEAS

    as
    1. Gary Charness & Matthew Rabin, 2002. "Understanding Social Preferences with Simple Tests," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(3), pages 817-869.
    2. Ernst Fehr & Klaus M. Schmidt, 1999. "A Theory of Fairness, Competition, and Cooperation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(3), pages 817-868.
    3. Botond Kőszegi & Matthew Rabin, 2006. "A Model of Reference-Dependent Preferences," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 121(4), pages 1133-1165.
    4. Loomes, Graham & Sugden, Robert, 1982. "Regret Theory: An Alternative Theory of Rational Choice under Uncertainty," Economic Journal, Royal Economic Society, vol. 92(368), pages 805-824, December.
    5. Dufwenberg, Martin & Kirchsteiger, Georg, 2004. "A theory of sequential reciprocity," Games and Economic Behavior, Elsevier, vol. 47(2), pages 268-298, May.
    6. Axel Ockenfels & Gary E. Bolton, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March.
    7. Rabin, Matthew, 1993. "Incorporating Fairness into Game Theory and Economics," American Economic Review, American Economic Association, vol. 83(5), pages 1281-1302, December.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Relative comparisons; Reference points; Simultaneous-move games; Kindness; Strategic complementarities.;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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