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

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.Relative comparisons, Reference points, Simultaneous-move games, Kindness, Strategic complementarities.