Reference dependence, cooperation, and coordination in games
The problems of how self-interested players can cooperate despite incentives to defect, and how players can coordinate despite the presence of multiple equilibria, are among the oldest and most fundamental in game theory. In this report, we demonstrate that a plausible and even natural specification...
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| Format: | Article |
| Language: | English |
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Cambridge University Press
2015-03-01
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| Series: | Judgment and Decision Making |
| Subjects: | |
| Online Access: | https://www.cambridge.org/core/product/identifier/S1930297500003909/type/journal_article |
| _version_ | 1797696010634395648 |
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| author | Mark Schneider Jonathan W. Leland |
| author_facet | Mark Schneider Jonathan W. Leland |
| author_sort | Mark Schneider |
| collection | DOAJ |
| description | The problems of how self-interested players can cooperate despite incentives to defect, and how players can coordinate despite the presence of multiple equilibria, are among the oldest and most fundamental in game theory. In this report, we demonstrate that a plausible and even natural specification of the reference outcome in a game simultaneously predicts systematic cooperation and defection in the Prisoner’s Dilemma, as well as equilibrium selection and out-of-equilibrium play in coordination games. The predictions hold even if players are purely self-interested, there are no salient labels, the game is played only once, and there is no communication of any kind. Furthermore, the predictions are unique, as opposed to the multiplicity of equilibria in the infinitely repeated Prisoner’s Dilemma and in coordination games. We apply experimental results to test the predictions of the model. |
| first_indexed | 2024-03-12T03:20:25Z |
| format | Article |
| id | doaj.art-b8873b18d6004d0ca2f85d86482f3603 |
| institution | Directory Open Access Journal |
| issn | 1930-2975 |
| language | English |
| last_indexed | 2024-03-12T03:20:25Z |
| publishDate | 2015-03-01 |
| publisher | Cambridge University Press |
| record_format | Article |
| series | Judgment and Decision Making |
| spelling | doaj.art-b8873b18d6004d0ca2f85d86482f36032023-09-03T14:02:36ZengCambridge University PressJudgment and Decision Making1930-29752015-03-011012312910.1017/S1930297500003909Reference dependence, cooperation, and coordination in gamesMark Schneider0Jonathan W. Leland1University of Connecticut, School of Business, 2100 Hillside Road Unit 1041. Storrs, CT 06269-1041National Science Foundation, Arlington VAThe problems of how self-interested players can cooperate despite incentives to defect, and how players can coordinate despite the presence of multiple equilibria, are among the oldest and most fundamental in game theory. In this report, we demonstrate that a plausible and even natural specification of the reference outcome in a game simultaneously predicts systematic cooperation and defection in the Prisoner’s Dilemma, as well as equilibrium selection and out-of-equilibrium play in coordination games. The predictions hold even if players are purely self-interested, there are no salient labels, the game is played only once, and there is no communication of any kind. Furthermore, the predictions are unique, as opposed to the multiplicity of equilibria in the infinitely repeated Prisoner’s Dilemma and in coordination games. We apply experimental results to test the predictions of the model.https://www.cambridge.org/core/product/identifier/S1930297500003909/type/journal_articleprisoner’s dilemmacoordination gamesreference-dependent preferences |
| spellingShingle | Mark Schneider Jonathan W. Leland Reference dependence, cooperation, and coordination in games Judgment and Decision Making prisoner’s dilemma coordination games reference-dependent preferences |
| title | Reference dependence, cooperation, and coordination in games |
| title_full | Reference dependence, cooperation, and coordination in games |
| title_fullStr | Reference dependence, cooperation, and coordination in games |
| title_full_unstemmed | Reference dependence, cooperation, and coordination in games |
| title_short | Reference dependence, cooperation, and coordination in games |
| title_sort | reference dependence cooperation and coordination in games |
| topic | prisoner’s dilemma coordination games reference-dependent preferences |
| url | https://www.cambridge.org/core/product/identifier/S1930297500003909/type/journal_article |
| work_keys_str_mv | AT markschneider referencedependencecooperationandcoordinationingames AT jonathanwleland referencedependencecooperationandcoordinationingames |