Boundedly Rational Decision Emergence - A General Perspective and Some Selective Illustrations

A general framework is described specifying how boundedly rational decision makers generate their choices. Starting from a "Master Module" which keeps an inventory of previously successful and unsuccessful routines several submodules can be called forth which either allow one to adjust behavior (by "Learning Module" and "Adaptation Procedure") or to generate new decision routines (by applying "New Problem Solver"). Our admittedly bold attempt is loosely related to some stylized experimental results.

“Economic man” in cross-cultural perspective: Behavioral experiments in 15 small-scale societies

Researchers from across the social sciences have found consistent deviations from the predictions of the canonical model of self-interest in hundreds of experiments from around the world. This research, however, cannot determine whether the uniformity results from universal patterns of human behavior or from the limited cultural variation available among the university students used in virtually all prior experimental work. To address this, we undertook a cross-cultural study of behavior in ultimatum, public goods, and dictator games in a range of small-scale societies exhibiting a wide variety of economic and cultural conditions. We found, first, that the canonical model – based on self-interest – fails in all of the societies studied. Second, our data reveal substantially more behavioral variability across social groups than has been found in previous research. Third, group-level differences in economic organization and the structure of social interactions explain a substantial portion of the behavioral variation across societies: the higher the degree of market integration and the higher the payoffs to cooperation in everyday life, the greater the level of prosociality expressed in experimental games. Fourth, the available individual-level economic and demographic variables do not consistently explain game behavior, either within or across groups. Fifth, in many cases experimental play appears to reflect the common interactional patterns of everyday life

Why People Reject Advantageous Offers – Non-monotone Strategies in Ultimatum Bargaining

When using the strategy method in ultimatum bargaining, many researchers ask responders for the minimal acceptable offer only implicitly assuming strategies to be monotone. Recent research has shown, however, that subjects decline disadvantageous and advantageous proposals. We report on an ultimatum game video experiment where more than 50 percent of the responders rejected advantageous offers. Proposers and responders acted together in groups of three people each and were video taped during decision making. The videotapes then were content analyzed. Our experimental design provides the unique opportunity to learn from participants’ spontaneous discussions about their motivations for rejecting advantageous offers. Main motives are social concern, non-expectancy of high offers, emotional, ethical, and moral reasons, group-specific decision rules and aversion against unpleasant numbers.ultimatum game, video experiments, strategy method, content analysis, non-monotone strategies, social preferences

Cooling-Off in Negotiations - Does It Work?

Negotiations frequently end in conflict after one party rejects a final offer. In a large-scale internet experiment, we investigate whether a 24-hour coolingoff period leads to fewer rejections in ultimatum bargaining. We conduct a standard cash treatment and a lottery treatment, where subjects receive lottery tickets for several large prizes - emulating a high-stakes environment. In the lottery treatment, unfair offers are less frequently rejected, and cooling-off significantly reduces the rejection rate further. In the cash treatment, rejections are more frequent and remain so after cooling-off. This treatment difference is particularly pronounced for subjects with lower cognitive abilities.

Bounded rationality for relaxing best response and mutual consistency: The Quantal Hierarchy model of decision-making

While game theory has been transformative for decision-making, the assumptions made can be overly restrictive in certain instances. In this work, we focus on some of the assumptions underlying rationality such as mutual consistency and best response, and consider ways to relax these assumptions using concepts from level-$k$ reasoning and quantal response equilibrium (QRE) respectively. Specifically, we provide an information-theoretic two-parameter model that can relax both mutual consistency and best response, but can recover approximations of level-$k$, QRE, or typical Nash equilibrium behaviour in the limiting cases. The proposed Quantal Hierarchy model is based on a recursive form of the variational free energy principle, representing self-referential games as (pseudo) sequential decisions. Bounds in player processing abilities are captured as information costs, where future chains of reasoning are discounted, implying a hierarchy of players where lower-level players have fewer processing resources. We demonstrate the applicability of the proposed model to several canonical economic games.Comment: 36 pages, 15 figure

Artificial morality: Making of the artificial moral agents

Abstract: Artificial Morality is a new, emerging interdisciplinary field that centres around the idea of creating artificial moral agents, or AMAs, by implementing moral competence in artificial systems. AMAs are ought to be autonomous agents capable of socially correct judgements and ethically functional behaviour. This request for moral machines comes from the changes in everyday practice, where artificial systems are being frequently used in a variety of situations from home help and elderly care purposes to banking and court algorithms. It is therefore important to create reliable and responsible machines based on the same ethical principles that society demands from people. New challenges in creating such agents appear. There are philosophical questions about a machine’s potential to be an agent, or mora l agent, in the first place. Then comes the problem of social acceptance of such machines, regardless of their theoretic agency status. As a result of efforts to resolve this problem, there are insinuations of needed additional psychological (emotional and cogn itive) competence in cold moral machines. What makes this endeavour of developing AMAs even harder is the complexity of the technical, engineering aspect of their creation. Implementation approaches such as top- down, bottom-up and hybrid approach aim to find the best way of developing fully moral agents, but they encounter their own problems throughout this effort

Make Him an Offer He Can’t Refuse: Avoiding Conflicts through Side Payments

The equilibrium of a two-stage conflict game with side-payments predicts that with binding stage-one offers, proposers make and responders accept side-payments, generating settlements that strongly favor proposers. When side-payments are non-binding, proposers offer nothing and conflicts always arise. Laboratory experiments confirm that binding side-payments reduce conflicts. However, 30% of responders reject binding offers, and offers are more egalitarian than predicted. Surprisingly, non-binding side-payments also improve efficiency, although less than binding. With binding side-payments, 98% of efficiency gains come from avoided conflicts. However, with non-binding side-payments, only 49% of gains come from avoided conflicts and 51% from reduced conflict expenditures.contest, conflict resolution, side payments, experiments

Modelling human fairness in cooperative games : a goal programming approach

The issues of rationality in human behavior and fairness in cooperation have gained interest in various economic studies. In many prescriptive models of games, rationality of human decision makers implicitly assumes exchange-ability. This means that real people are assumed to adopt the beliefs of a player as expressed in the game when placed in the shoes of that particular player. However, it is a well debated topic in the literature that this modeling assumption is not in accordance to what behavioral economists have observed in some games played with real human subjects. Even when assuming the role of the same player in the game, different people think differently about the fairness of a particular outcome. People also view fairness as an essential ingredient of their decision making processes in games on cooperation. The aim of this research is to develop a new modeling approach to decision making in games on cooperation in which fairness is an important consideration. The satisficing and egilitarian philosophies on which weighted and Chebyshev Goal Programming (GP) rely, seem to offer an adequate and natural way for modeling human decision processes in at least the single-shot games of coordination that are investigated in this work. The solutions returned by the proposed GP approach aim to strike the right balance on several dimensions of con icting goals that are set by players themselves and that arise in the mental models these players have of other relevant players.EThOS - Electronic Theses Online ServiceGBUnited Kingdo