Tough Behavior in the Repeated Bargaining Game. A Computer Simulation Study.

Bargaining behavior occupies an important part in economics literature, or social sciences in general. Although there is an extensive simulation literature on social tradeoff in the Prisoner's Dilemma and the one-shot bargaining game, little has been done for the repeated bargaining game. Part of reason for this neglect is that, despite having a continuum of Nash equilibria, under homogeneous settings, the one shot bargaining game consistently gives a stable equilibrium of fairness (50-50 division), robust to many kind of tough perturbations. However, it's true that social interaction doesn't always yield unconditional egalitarianism. Hence we simulate a population of homogeneous agents playing the repeated bargaining game to test the stability of the 50-50 norm under evolutionary force. It turns out that when it comes to repeated interaction, the fair norm no longer stands strong

Fairness, Public Good, and Emotional Aspects of Punishment Behavior

We report an experiment on two treatments of an ultimatum minigame.In one treatment, responders' reactions are hidden to proposers.We observe high rejection rates reflecting responders' intrinsic resistance to unfairness.In the second treatment, proposers are informed, allowing for dynamic effects over eight rounds of play.The higher rejection rates can be attributed to responders' provision of a public good: Punishment creates a group reputation for being "tough" and effectively "educate" proposers.Since rejection rates with informed proposers drop to the level of the treatment with non-informed proposers, the hypothesis of responders' enjoyment of overt punishment is not supported.game theory;public goods;bargaining;punishment;experimental economics

An Evolutionary Learning Approach for Adaptive Negotiation Agents

Developing effective and efficient negotiation mechanisms for real-world applications such as e-Business is challenging since negotiations in such a context are characterised by combinatorially complex negotiation spaces, tough deadlines, very limited information about the opponents, and volatile negotiator preferences. Accordingly, practical negotiation systems should be empowered by effective learning mechanisms to acquire dynamic domain knowledge from the possibly changing negotiation contexts. This paper illustrates our adaptive negotiation agents which are underpinned by robust evolutionary learning mechanisms to deal with complex and dynamic negotiation contexts. Our experimental results show that GA-based adaptive negotiation agents outperform a theoretically optimal negotiation mechanism which guarantees Pareto optimal. Our research work opens the door to the development of practical negotiation systems for real-world applications

Bargaining efficiency and screening: An experimental investigation

This paper investigates whether information about fairness types can be useful in lowering dispute costs and enhancing bargaining efficiency. An experiment was conducted in which subjects were first screened using a dictator game, with the allocations chosen used to separate participants into two types. Mutually anonymous pairs of subjects then bargained, with a dispute cost structure imposed. Sorting with identification reduces dispute costs; there are also significant differences in bargaining efficiency across pairing types. Information about types is crucial for these differences and also strongly affects the relative bargaining success of the two types and the hypothetical optimal bargaining strategy.Bargaining efficiency, dispute resolution, experiment, fairness, sorting, Leex

Is Strong Reciprocity a Maladaptation? On the Evolutionary Foundations of Human Altruism

In recent years a large number of experimental studies have documented the existence of strong reciprocity among humans. Strong reciprocity means that people willingly repay gifts and punish the violation of cooperation and fairness norms even in anonymous one-shot encounters with genetically unrelated strangers. We provide ethnographic and experimental evidence suggesting that ultimate theories of kin selection, reciprocal altruism, costly signaling and indirect reciprocity do not provide satisfactory evolutionary explanations of strong reciprocity. The problem of these theories is that they can rationalize strong reciprocity only if it is viewed as maladaptive behavior whereas the evidence suggests that it is an adaptive trait. Thus, we conclude that alternative evolutionary approaches are needed to provide ultimate accounts of strong reciprocity.

The development of interpersonal strategy: Autism, theory-of-mind, cooperation and fairness

Mentalising is assumed to be involved in decision-making that is necessary to social interaction. We investigated the relationship between mentalising and three types of strategic games - Prisoners' Dilemma, Dictator and Ultimatum - in children with and without autistic spectrum disorders. Overall, the results revealed less dramatic differences than expected among the normally developing age groups and the children with autism, suggesting that in these laboratory tasks, mentalising skills are not always necessary. There were, nonetheless, some important findings. Young children were more cautious about initiating cooperation than their older peers and, in bargaining situations, they were less generous in their opening unilateral grants and over-solicitous of an empowered receiver. Participants with autism did have a harder time shifting strategy between versions of the Prisoners' Dilemma, and they were much more likely to accept low initial offers in the Ultimatum game and to refuse fair proposals. In addition, participants' measured mentalising abilities explain intentional and strategic behaviour within the prisoners' dilemma and the avoidance of unsuccessful ultimatum proposals

Destructive Creation

"Destructive Creation" is the deliberate introduction of new, perhaps improved generations of durable goods that destroy, directly or indirectly, the usage value of units previously sold inducing consumers to repeat their purchase. This paper discusses this practice by a single seller in an infinite-horizon, discrete time model with heterogeneous consumers. Despite the lack of commitment power over future prices and introduction policies, this practice restores partially or totally market power even though consumers anticipate opportunistic behavior. However, the monopoly resorts "too much" to this mechanism from an ex-ante, profit maximizing perspective. High prices in earlier periods allow the seller to commit to defer innovation and therefore to maintain buyers' confidence over "durability". The paper characterizes the equilibrium properties of the resulting innovation cycles such as existence, uniqueness and asymptotic stability and discusses potential regulatory remedies in those instances where destructive creation generates economic inefficiencies. This theory applies, among others, to markets characterized by network externalities, compatibility issues, standard setting, social consumption and signal provision and may help explain many restrictive aftermarket practices as well as excessive add-on pricing without relying on any leverage hypothesis.durable goods; aftermarkets; planned obsolescence;

Making Sense of Unexpected Preferences

This dissertation includes three papers using quantitative models to sensibly describe what kinds of preferences political actors will or actually do hold when existing theory offers no insight. The first two papers use evolutionary game theory to predict ways in which politicians, artificially selected on the basis of good performance to remain in office, will in the long run diverge from instrumental rationality as ordinarily assumed in game theory. The first sets out a general principle for producing models of preference evolution in games as political models, namely, that the information about opponent preferences necessary for evolution of non-rational preferences comes from opponents\u27 previous plays, and applies it to two simple games. The second uses the same principles in more detail on a bargaining game that models the plea negotiations between a prosecutor and a defense attorney, leading to a conclusion that failure to learn from setbacks during a trial is an evolutionarily favored trait among prosecutors. The third paper addresses the ideological preferences of Supreme Court justices, which existing statistical models do not effectively compare to those of elected officials since the two groups never vote on the same items, by identifying a set of political actors with whom both groups commonly interact: organized interest groups who vote on Supreme Court cases with amicus curiae briefs and on electoral candidates using campaign donations