The Effect of Incentives: The Value of Reputation

2021 ◽  
pp. 99-118
Author(s):  
Jason Brennan ◽  
William English ◽  
John Hasnas ◽  
Peter Jaworski

It is useful to model the temptation to act wrongly using the prisoner’s dilemma, one of the most important games in game theory. The prisoner’s dilemma appears to show that the pursuit of self-interest can paradoxically lead to situations in which everyone makes choices they know will undermine their self-interest. However, introducing the possibility of repeated, self-sorting prisoner’s dilemmas with reputation effects reveals something important about the connection between self-interest and morality: We have strong incentives not to cheat because in the long run, we do best by developing the reputation for being honest. However, unfortunately, this also introduces an incentive to exaggerate our moral goodness and to engage in moral grandstanding.

Mathematics ◽  
2021 ◽  
Vol 9 (12) ◽  
pp. 1443
Author(s):  
Zhiyuan Dong ◽  
Ai-Guo Wu

In this paper, we extend the quantum game theory of Prisoner’s Dilemma to the N-player case. The final state of quantum game theory of N-player Prisoner’s Dilemma is derived, which can be used to investigate the payoff of each player. As demonstration, two cases (2-player and 3-player) are studied to illustrate the superiority of quantum strategy in the game theory. Specifically, the non-unique entanglement parameter is found to maximize the total payoff, which oscillates periodically. Finally, the optimal strategic set is proved to depend on the selection of initial states.


2020 ◽  
Author(s):  
Marco Rojas ◽  
Damián Vergara

Abstract We study the effects of ambiguity on long-run cooperation in infinitely repeated strategic games. Using a simple parametric model of ambiguity, we study conditions for sustaining cooperative equilibria in the long-run. We apply our framework to the prisoner’s dilemma and duopoly models. We find that (i) ambiguity may affect the game’s structure eventually making the noncooperative equilibrium ex ante preferred; (ii) higher levels of ambiguity make long-run cooperation less likely since it makes punishment schemes less effective; and (iii) large levels of ambiguity may preclude the possibility of mutually beneficial long-run agreements, even when cooperation is beneficial from an ex ante perspective.


1984 ◽  
Vol 55 (3) ◽  
pp. 687-696 ◽  
Author(s):  
Rick M. Gardner ◽  
Terry L. Corbin ◽  
Janelle S. Beltramo ◽  
Gary S. Nickell

Cooperation in pairs of rats playing the prisoner's dilemma game was investigated. Six pairs of animals were taught to make either cooperative or uncooperative responses by running to one or the other end of a T-maze. Two T-mazes were joined together such that animals could respond simultaneously. Animals were run under conditions in which visual communication was present and absent. Mutually uncooperative responses were the most common and mutually cooperative behaviors the least preferred. Introduction of a barrier between the mazes, which removed visual communication between pairs, sharply accentuated uncooperative behavior. Similarities of the present findings to results with human subjects and the implications of using game theory for studying cooperative behavior in animals are discussed.


2021 ◽  
Vol 14 ◽  
pp. 122-126
Author(s):  
Aleksandra L. Grinikh ◽  
◽  
Leon A. Petrosyan ◽  

In the paper n-person prisoner's dilemma on the network is investigated. A cooperative game with the pairwise interaction of players is constructed. The model is a modification of the classic 2-person prisoner's dilemma problem in the game theory. Network interaction provide an ability to take into account the in uence only to the adjacent players from the whole set of players. The feature of the game is found that allows to make a decision about necessity of playing dominated strategy by a few players. This solution is based on the number of the adjacent players. The work is a continuation of the paper published earlier by Grinikh A.L. and Petrosyan L.A. in 2021.


2009 ◽  
Vol 41 (1) ◽  
pp. 154-176 ◽  
Author(s):  
Hsiao-Chi Chen ◽  
Yunshyong Chow

In this paper we explore the impact of imitation rules on players' long-run behaviors in evolutionary prisoner's dilemma games. All players sit sequentially and equally spaced around a circle. Players are assumed to interact only with their neighbors, and to imitate either their successful neighbors and/or themselves or the successful actions taken by their neighbors and/or themselves. In the imitating-successful-player dynamics, full defection is the unique long-run equilibrium as the probability of players' experimentations (or mutations) tend to 0. By contrast, full cooperation could emerge in the long run under the imitating-successful-action dynamics. Moreover, it is discovered that the convergence rate to equilibrium under local interaction could be slower than that under global interaction.


2018 ◽  
pp. 193-220
Author(s):  
Barry Hoffmaster ◽  
Cliff Hooker

Ethics is embedded in the practices and institutions of society. Three examples illustrate the communal importance of ethical design. First is the distinction between Fights, Games, and Debates as successively more ethical and more intelligent institutional designs for handling conflict. The second is the Prisoner’s Dilemma in game theory, whose best solution is to step outside the game and change the surrounding institutional design. The third is an account of the ethical and effective institutional design solutions for various situations, especially of mediation for those that invoke the notion of ‘polycentric’ problems.


1999 ◽  
Vol 9 (1) ◽  
pp. 37-45 ◽  
Author(s):  
Kay Mathiesen

Solomon’s article and Binmore’s response exemplify a standard exchange between the game theorist and those critical of applying game theory to ethics. The critic of game theory lists a number of problems with game theory and the game theorist responds by arguing that the critic’s objections are based on a misrepresentation of the theory. Binmore claims that the game theorist is in the position of the innocent man who, when asked why he beats his wife, must explain that he doesn’t beat his wife at all (Binmore, 2). However, even if we agree that the denial is true, we might still like to know why, if you are not beating your wife, do others consistently accuse you of doing so? Or, to get away from this rather sexist metaphor, why are critics of game theory like Solomon (according to game theorists) consistently getting game theory wrong?While, as I argue in the first section, critics of game theory such as Solomon may misrepresent game theory, this misrepresentation is not entirely their own fault. The way in which game theory is traditionally presented is misleading. For example, students are usually first introduced to game theory through the prisoner’s dilemma. It is compelling drama, but lousy PR for the use of ethics in game theory. (You want to know what to do? Let’s see how two thieves reason.) However, while Binmore is right to argue that game theory neither assumes nor entails the theory of human nature that Solomon finds objectionable, Solomon is also right to argue that game theory is promulgated and applied with what appear to be a robust set of assumptions about human motivation. I argue in the second section, however, that in fact neither these applications of game theory, nor game theory itself, is committed to a particular theory of human motivation. Thus, while game theory is not able to provide a complete ethical theory (assuming that a theory of human motivation is essential to such a theory), it is not contrary to ethics. In the final section I note that Aristotle, rather than being the alternative to using game theory in business ethics, as Solomon suggests, actually points the way to an ethical theory that can combine a discussion of both game theory and “those nagging and controversial questions about what it is that people do and ought to care about” (Solomon, 7).


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