Cooperation in the Prisoner's Dilemma Game Based on the Second-Best Decision

In the research addressing the prisoner's dilemma game, the effectiveness and accountableness of the method allowing for the emergence of cooperation is generally discussed. The most well-known solutions for this question are memory based iteration, the tag used to distinguish between defector and cooperator, the spatial structure of the game and the either direct or indirect reciprocity. We have also challenged to approach the topic from a different point of view namely that temperate acquisitiveness in decision making could be possible to achieve cooperation. It was already shown in our previous research that the exclusion of the best decision had a remarkable effect on the emergence of an almost cooperative state. In this paper, we advance the decision of our former research to become more explainable by introducing the second-best decision. If that decision is adopted, players also reach an extremely high level cooperative state in the prisoner's dilemma game and also in that of extended strategy expression. The cooperation of this extended game is facilitated only if the product of two parameters is under the criticality. In addition, the applicability of our model to the problem in the real world is discussed.Cooperation, Altruism, Agent-Based Simulation, Evolutionary Game Theory

Leaving the prison: A discussion of the Iterated prisoner`s dilemma under preferential partner selection.

Outside prison agents do not only ehoose a game strategy but also a game partner. In this paper players are finite automata and willing to interaet only if their expected payoff exeeeds an endogenously evolving aeeeptable minimum. In the resulting behavioural strueture the initial population is subdivided aeeording to players' degree of exploitiveness. If the number of eooperators is at least two, eooperators will be better off than defeetors. If more sueeessful automata reproduce, simulations show that due to partner seleetion eooperative behaviour is irnmune to invading mutants even if the life-span of generations is short.Prisoner`s dilemma; Partner selection; Finite automata; Matching;

Stylised Facts and the Contribution of Simulation to the Economic Analysis of Budgeting

The application of computer simulation as a research method raises two important questions: (1) Does simulation really offer added value over established methods? (2) How can the danger of arbitrariness caused by the extended modelling possibilities be minimised? We present the concept of stylised facts as a methodological basis for approaching these questions systematically. In particular, stylised facts provide a point of reference for a comparative analysis of models intended to explain an observable phenomenon. This is shown with reference to a recent discussion in the "economic analysis of accounting" literature where established methods, i.e. game theory, as well as computer simulations are used: the susceptibility of the "Groves mechanism" to collusion. Initially, we identify six stylised facts on the stability of collusion in empirical studies. These facts serve as a basis for the subsequent comparison of four theoretical models with reference to the above questions: (1) We find that the simulation models of Krapp and Deliano offer added value in comparison to the game theoretical models. They can be related to more stylised facts, achieve a better reproduction and exhibit far greater potential for incorporating yet unaddressed stylised facts. (2) Considered in the light of the stylised facts to which the models can be related, Deliano's simulation model exhibits considerable arbitrariness in model design and lacks information on its robustness. In contrast, Krapp demonstrates that this problem is not inherent to the method. His simulation model methodically extends its game theoretical predecessors, leaving little room for arbitrary model design or questionable parameter calibration. All in all, the stylisedfactsconcept proved to be very useful in dealing with the questions simulation researchers are confronted with. Moreover, a "research landscape" emerges from the derived stylised facts pinpointing issues yet to be addressed.Computer Simulation, Stylised Facts, Methodology, Groves Mechanism, Collusion, Game Theory

Leading by example in intergroup competition: An experimental approach

We investigate leading by example in a public goods game in scenarios with and without intergroup competition. Leading by example is implemented via a sequential decision protocol. We examine both one-shot and repeated interaction and make use of the strategy method to characterize followers' conditional responses to the leader's contribution. The results show that only follower but not leader behavior is affected by the introduction of intergroup competition. The change in follower behavior is best described as an increase in cooperation which is not conditional on the leader's decision. When groups interact repeatedly, we do not find that leading by example is able to foster cooperation by itself. It only significantly improves contributions when it is accompanied by intergroup competition.Public goods, Leading by example, Intergroup competition, Strategy method

Experimental Economics

This is the first comprehensive treatment of laboratory experiments designed to evaluate economic propositions under carefully controlled conditions. While it acknowledges that laboratory experiments are no panacea, it argues cogently for their effectiveness in selected situations. Covering methodological and procedural issues as well as theory, Experimental Economics is not only a textbook but also a useful introduction to laboratory methods for professional economists. The emphasis is on organizing and evaluating existing results. The book can be used as an anchoring device for a course at either the graduate or advanced undergraduate level. Applications include financial market experiments, oligopoly price competition, auctions, bargaining, provision of public goods, experimental games, and decision making under uncertainty. The book also contains instructions for a variety of laboratory experiments.laboratory experiments, financial markets, price competition, auctions, bargaining, games, decision making, uncertainty

Experimental economics: Methods, problems and promise

The purpose of this paper is to discuss the growing importance of experimentation in economic analysis. We present a variety of economic issues that have been explored with laboratory techniques. We also address some common objections to experimentation, as well as some of the principal lessons that have been learned.

Leaving the prison: A discussion of the Iterated prisoner`s dilemma under preferential partner selection

Outside prison agents do not only ehoose a game strategy but also a game partner. In this paper players are finite automata and willing to interaet only if their expected payoff exeeeds an endogenously evolving aeeeptable minimum. In the resulting behavioural strueture the initial population is subdivided aeeording to players' degree of exploitiveness. If the number of eooperators is at least two, eooperators will be better off than defeetors. If more sueeessful automata reproduce, simulations show that due to partner seleetion eooperative behaviour is irnmune to invading mutants even if the life-span of generations is short

The Behaviour of Corporate Actors. A Survey of the Empirical Literature

Much of behavioural research, both in economics and in psychology, is limited in one respect: it tests isolated individuals. In many practically relevant situations, there are discernible actors, but these actors are not individuals. Rather firms, regulatory bodies, associations, countries or international organisations become active. The social problem at hand is best understood if one attributes judgement and decision making to higher level aggregates of individuals. Which elements from the rich body of behavioural evidence transfer to these corporate actors? Are there other deviations from the predictions of the rational choice model, not present or studied in individuals? This paper surveys the empirical literature from experimental economics, psychology, sociology and law. While some building blocks, like the behaviour of managers and of ad hoc groups, are relatively well understood, our knowledge about the effects of more elaborate internal structure on the dealings of corporate actors with the outer world is still relatively limited.Behaviour, Firms, Organizations, Associations, Groups

A game theory perspective on Environmental Assessment: what games are played and what does this tell us about decision making rationality and legitimacy?

Game theory provides a useful theoretical framework to examine the decision process operating in the context of environmental assessment, and to examine the rationality and legitimacy of decision-making subject to Environmental Assessment (EA). The research uses a case study of the Environmental Impact Assessment and Sustainability Appraisal processes undertaken in England. To these are applied an analytical framework, based on the concept of decision windows to identify the decisions to be assessed. The conditions for legitimacy are defined, based on game theory, in relation to the timing of decision information, the behaviour type (competitive, reciprocal, equity) exhibited by the decision maker, and the level of public engagement; as, together, these control the type of rationality which can be brought to bear on the decision. Instrumental rationality is based on self-interest of individuals, whereas deliberative rationality seeks broader consensus and is more likely to underpin legitimate decisions. The results indicate that the Sustainability Appraisal process, conducted at plan level, is better than EIA, conducted at project level, but still fails to provide conditions that facilitate legitimacy. Game theory also suggests that Sustainability Appraisal is likely to deliver ‘least worst’ outcomes rather than best outcomes when the goals of the assessment process are considered; this may explain the propensity of such ‘least worst’ decisions in practice. On the basis of what can be learned from applying this game theory perspective, it is suggested that environmental assessment processes need to be redesigned and better integrated into decision making in order to guarantee the legitimacy of the decisions made