nep-gth New Economics Papers
on Game Theory
Issue of 2007‒07‒20
two papers chosen by
Laszlo A. Koczy
University of Maastricht

  1. Conformism and Cooperation in a Local Interaction Model By Mengel, Friederike
  2. Neural Substrates of Decision-Making in Economic Games By Stanton, Angela A.

  1. By: Mengel, Friederike
    Abstract: We present and analyze a local interaction model where agents play a bilateral prisoner's dilemma game with their neighbors. Agents learn about behavior through payoff-biased imitation of their interaction neighbors (and possibly some agents beyond this set). We find that the [Eshel, I., L. Samuelson and A. Shaked, 1998, Altruists, Egoists and Hooligans in a Local Interaction Model, Am. Econ. Rev 88] result that polymorphic states are stochastically stable in such a setting is not robust. In particular whenever agents use information also of some agents beyond their interaction neighbors the unique stable outcome is one where everyone chooses defection. Introducing a sufficiently strong conformist bias into the imitation process we find that full cooperation always emerges. Conformism is thus identified as a new mechanism that can stabilize cooperation.
    Keywords: Cooperation; Imitation; Local Interaction; Conformism.
    JEL: C72 C73
    Date: 2007–04
    URL: http://d.repec.org/n?u=RePEc:pra:mprapa:4051&r=gth
  2. By: Stanton, Angela A.
    Abstract: In economic experiments decisions often differ from game-theoretic predictions. Why are people generous in one-shot ultimatum games with strangers? Is there a benefit to generosity toward strangers? Research on the neural substrates of decisions suggests that some choices are hormone-dependent. By artificially stimulating subjects with neuroactive hormones, we can identify which hormones and brain regions participate in decisionmaking, to what degree and in what direction. Can a hormone make a person generous while another stingy? In this paper, two laboratory experiments are described using the hormones oxytocin (OT) and arginine vasopressin (AVP). Concentrations of these hormones in the brain continuously change in response to external stimuli. OT enhances trust (Michael Kosfeld et al. 2005b), reduce fear from strangers (C. Sue Carter 1998), and has anti-anxiety effects (Kerstin Uvnäs-Moberg, Maria Peterson 2005). AVP enhances attachment and bonding with kin in monogamous male mammals (Jennifer N. Ferguson et al. 2002) and increases reactive aggression (C. Sue Carter 2007). Dysfunctions of OT and/or AVP reception have been associated with autism (Miranda M. Lim et al. 2005). In Chapter One I review past experiments with the ultimatum (UG) and dictator (DG) games and visit some of the major results in the literature. In Chapter Two I present the results of my laboratory experiment where I examine why people are generous in one-shot economic games with strangers. I hypothesize that oxytocin would enhance generosity in the UG. Players in the OT group were much more generous than those in the placebo—OT offers in the UG were 80% higher than offers on placebo. Enhanced generosity was not due to altruism as there was no effect on DG offers. This implies that other-regarding preferences are at play in the amount of money sent but only in a reciprocal context. The third chapter presents an experiment on punishment. I hypothesized that AVP would increase rejections and stinginess in the UG and TG. Results show that AVP affects rejections and stinginess in small groups but not in large ones. Chapter Four contains the summary of future research suggestions.
    Keywords: Oxytocin; Vasopressin; ultimatum game; dictator game; trust game; generosity; altruism
    JEL: Y40 D01 Z00
    Date: 2007–05–12
    URL: http://d.repec.org/n?u=RePEc:pra:mprapa:4030&r=gth

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