Fairness In Game Theory: Difference between revisions
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:::The extent to which people are willing to sacrifice their potential "material gains" to maintain fairness is dependent on the size of such gains. For instance, in a situation where the division of money is $0.90 to the proposer and $0.10 to the decider, the decider will most likely give up his share entirely to "punish" the proposer for suggesting such an unfair offer (assuming that both players receive nothing if the offer is declined). However, if the stakes had been increased from the limits of a dollar to a division of $9 million and $1 million, respectively, then the decider may been far less willing to sacrifice that amount. | :::The extent to which people are willing to sacrifice their potential "material gains" to maintain fairness is dependent on the size of such gains. For instance, in a situation where the division of money is $0.90 to the proposer and $0.10 to the decider, the decider will most likely give up his share entirely to "punish" the proposer for suggesting such an unfair offer (assuming that both players receive nothing if the offer is declined). However, if the stakes had been increased from the limits of a dollar to a division of $9 million and $1 million, respectively, then the decider may been far less willing to sacrifice that amount. | ||
:::Hayek's | :::''Hayek's Research'' | ||
Revision as of 01:32, 11 April 2006
Is it fair to assume that players are entirely self-interested?
People sometimes take others' actions into consideration...
- They are kind to those who act kindly towards them
- They are hurtful and retaliatory towards those who are unkind
People may not only refuse to help those who are unkind, but will actually sacrifice their payoffs to hurt those who are being unfair.
- The Ultimatum Game
- The Ultimatum Game is a situation in which a set of individuals must decide upon the division of a fixed sum of money. The game consists of two players, the proposer, who extends an offer to the decider, who can either accept or decline that offer.
- The extent to which people are willing to sacrifice their potential "material gains" to maintain fairness is dependent on the size of such gains. For instance, in a situation where the division of money is $0.90 to the proposer and $0.10 to the decider, the decider will most likely give up his share entirely to "punish" the proposer for suggesting such an unfair offer (assuming that both players receive nothing if the offer is declined). However, if the stakes had been increased from the limits of a dollar to a division of $9 million and $1 million, respectively, then the decider may been far less willing to sacrifice that amount.
- Hayek's Research
- Prisoner's Dilemma versus Prisoner's Non-dilemma
- Fairness Retailiation and Reciprocity
